Suggest an attractive tax plan to carry out

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Problem - The stock of Emerald Corporation is held equally by Barney and Faye. The shareholders would like to receive, as a dividend, value of $800,000 each. The corporation has the following assets that it no longer uses.

Asset

Adjusted Basis to Emerald Corporation

Fair Market Value

Unimproved land

$1,040,000

$800,000

Chevron stock

480,000

800,000

Both assets are held as investments. Emerald Corporation has a capital loss carry-over from the previous year of $80,000 and has accumulated E & P in excess of $2,000,000.

Barney and Faye have come to you for advice. Suggest an attractive tax plan to carry out what the parties want. Write a letter (addressed to Emerald Corporation at PO Box 940, Rochester, NY 14692) describing your plan and its tax consequences.

Reference no: EM132673515

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