A corporation distributes land with a FMV of $85,000 (basis $50,000). The land has a mortgage of $95,000 assumed by the shareholder. Gain to the corporation is
A) $0.
B) $10,000.
C) $35,000.
D) $45,000.
D) $45,000.
If property distributed is subject to a liability that exceeds its basis, the FMV of such property for purposes of determining gain on the distribution is the greater of FMV or amount of the liability. ($95,000 - 50,000 = $45,000)
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a. True b. False
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