Amount of the distribution-taxed as dividend to shareholder

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Reference no: EM13150262

A calendar year corporation in its first year of operations reports earnings and profits of $50,000. In December of that year, it distributes land worth $40,000 to one of its shareholders. The corporation's basis in the land was $35,000, and the land is subject to a $15,000 mortgage. What is the amount of the distribution that will be taxed as a dividend to the shareholder?

A) $0.

B) $20,000.

C) $25,000.

D) $35,000.

Reference no: EM13150262

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