WGU C239 Advanced Tax Practice Exam | 50 Questions with 100% Correct Answers | Verified | Latest Update | 22 Pages

Catamount Company had current and accumulated E&P of $500,000 at December 31, 20X3. On December 31, the company made a distribution of land to its sole shareholder, Caroline West. The land's fair market value was $200,000 and its tax and E&P basis to Catamount was $250,000. The tax consequences of the distribution to Catamount in 20X3 would be: A) No loss recognized and a reduction in E&P of $250,000. B) $50,000 loss recognized and a reduction in E&P of $250,000. C) $50,000 loss recognized and a reduction in E&P of $150,000. D) No loss recognized and a reduction in E&P of $200,000. - a Paladin Corporation had current and accumulated E&P of $500,000 at December 31, 20X3. On December 31, the company made a distribution of land to its sole shareholder, Maria Mendez. The land's fair market value was $200,000 and its tax and E&P basis to Paladin was $250,000. Maria assumed a liability of $25,000 attached to the land. The tax consequences of the distribution to Paladin in 20X3 would be: A) No loss recognized and a reduction in E&P of $200,000. B) $50,000 loss recognized and a reduction in E&P of $200,000. C) $50,000 loss recognized and a reduction in E&P of $225,000. D) No loss recognized and a reduction in E&P of $225,000. - D This year Truckit reported taxable income of $160,000 and received $20,000 of municipal interest. Truckit paid $55,000 in entertainment expenses and $15,000 in fines and penaltiesTruckit had $50,000 of accumulated E&P at the beginning of the year. What is Truckit's current E&P? A) $180,000. B) $142,200. C) $110,000. D) $76,400. - D