(Solution) - Vogel Inc an S corporation for five years distributes a -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land was purchased for $45,000 ten years ago and is currently worth $120,000.
a. As a result of the distribution, what is Vogel?s recognized capital gain? How much is reported as a distribution to shareholders?
b. What is the net effect of the distribution on Vogel?s AAA?
c. Assume instead that the land had been purchased for $120,000 and was currently worth $45,000. How much would Vogel recognize as a loss? What would be the net effect on Vogel?s AAA? What would be Jamari?s basis in the land?