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RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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Tern Corp. distributes equipment (basis of $70,000 and fair ...

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Tern Corp. distributes equipment (basis of $70,000 and fair market value of $90,000) as a property dividend to its shareholders. The equipment is subject to a liability of $100,000. Tern recongizes a gain of:

If the distributed property is subject to a liability in excess of the basis than the fair market value is treated as not being less than the amount of the liability. So in above case the fmv is $100K. So the gain recognized is $30K.


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