Question

Shaker, Inc. distributes land to its shareholder, Robbie. The land's fair market value was 36,000 (adjusted basis of6,000) at the time of the distribution. Robbie assumed the 10,000 mortgage on the land. Shaker has current E P of100,000. What is the dividend received by Robbie and the gain or loss recognized by Shaker?

Answer 1

Robbie received a dividend of $46,000 and Shaker recognized a gain of $30,000

Step-by-step explanation:

To determine the dividend received by Robbie and the gain or loss recognized by Shaker, we need to calculate the amount of the distribution and the adjusted basis of the land.

The fair market value of the land was $36,000 and the adjusted basis was $6,000. Robbie assumed a $10,000 mortgage on the land.

To calculate the dividend received by Robbie, we add the fair market value of the land ($36,000) to the amount of the mortgage assumed by Robbie ($10,000). Therefore, Robbie received a dividend of $46,000.

To calculate the gain or loss recognized by Shaker, we subtract the adjusted basis of the land ($6,000) from the fair market value of the land ($36,000). Shaker recognized a gain of $30,000.