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On January 1, Reed Richards was the sole shareholder of Fantastic Deal Corporation. His stock...

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Accounting

On January 1, Reed Richards was the sole shareholder of Fantastic Deal Corporation. His stock basis was $200,000. On June 30, Fantastic distributes property to him with a FMV of $100,000 and a basis of $120,000. On July 1, he sells all of his stock to Matt Murdock for $250,000. On January 1, Fantastic had accumulated E&P of $110,000 and during the year, current E&P of $90,000. On November 1, Fantastic makes a cash distribution to Matt of $100,000.

A)How are the distributions taxed to Reed and Matt?

B) What is Matt's stock basis at the end of the year?

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