Taxation of Business Entities, 2016 edition7-65.) Wolverine Corporation made a distribution of $500,000 to Jim Har Inc. in par-tial liquidation of the company on December 31 of this year. Jim Har Inc. owns 100 percent of Wolverine Corporation. The distribution was in exchange for 50 percent of Jim Har Inc.'s stock in the company. At the time of the distri-bution, the shares had a fair market value of $200 per share. Jim Har Inc.'s in-come tax basis in the shares was $50 per share. Wolverine had total E&P of $8,000,000 at the time of the distribution. a.) What is the amount and character (capital gain or dividend) of any income or gain recognized by Jim Har Inc. as a result of the partial liquidation? b.) Assuming Wolverine made no other distributions to Jim Har Inc. during the year, by what amount does Wolverine reduce its total E&P as a result of the partial liquidation?
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