(Solution) - In the current year Sedgwick Corporation has 100 000 of current -(2025 Original AI-Free Solution)

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In the current year, Sedgwick Corporation has $100,000 of current and accumulated E&P. On March 3, Sedgwick distributes to its shareholder Dina a parcel of land (a capital asset) having a $56,000 FMV. The land has a $40,000 adjusted basis (for both taxable income and E&P purposes) to Sedgwick and is subject to an $8,000 mortgage, which Dina assumes. Assume a 34% marginal corporate tax rate.
a. What are the amount and character of the income Dina recognizes as a result of the distribution?
b. What is Dina?s basis in the land?
c. What are the amount and character of Sedgwick?s gain or loss as a result of the distribution?
d. What effect does the distribution have on Sedgwick?s E&P?