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1. Green, Inc., a C corporation, distributes a tract of land heldas an investment (FMV = $500,000, basis = $220,000) and itsmortgage of $550,000 to Susan at the end of the year. Green, Inc.has a current E&P of $190,000 for the year, and started theyear an accumulated E & P of $60,000. Green’s marginal tax rateis 21%. Susan has an individual marginal tax rate of 33% and both adividend and a long-term capital gains tax rate of 15%. Susan owns200 of Green’s 1,000 shares outstanding and her basis in her Greenstock is $20,000. Susan has held her stock for two years. Thedistribution does not qualify as a stock redemption, but would beclassified as a qualified dividend.  

1. What is Green’s recognized gain on thedistribution?           __________________

2. What is the increase in Green’s tax liability as a result ofthe distribution?

__________________

           

3. What is the amount of Susan’sdistribution?                       __________________

4. How much of the distribution is classified as adividend?           __________________

5. How much of the distribution is classified as a return ofcapital?                                                                                                                         __________________

6. How much of the distribution is taxed as a capitalgain?           __________________

7. What is the increase in Susan’s tax liability as a result ofthedistribution?                                                                                                            __________________

8. What is Green’s ending E&P (after thedistribution)?           __________________

1. What is Susan’s basis in theland?                                       __________________

10. What is Susan’s ending basis in her Greenstock?               __________________