Tour Corp., which had earnings and profits of $400,000, made a nonliquidating distribution of property to its shareholders during the current year. This property, which had an adjusted basis of $30,000 and a fair market value of $20,000 at date of distribution, did not constitute assets used in the active conduct of Tour's business. How much loss did Tour recognize on this distribution?

Question

Abbey Li

Business

15 December, 22:17

Tour Corp., which had earnings and profits of $400,000, made a nonliquidating distribution of property to its shareholders during the current year. This property, which had an adjusted basis of $30,000 and a fair market value of $20,000 at date of distribution, did not constitute assets used in the active conduct of Tour's business. How much loss did Tour recognize on this distribution?

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Violet Bishop · Answer 1

Adjusted basis less Market value=$30000-$20000=$10000

Explanation:

In actual terms the property was worth $30000 but commanded only $20000 in the market, invariably $10000 is lost