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What is Rose basis in the land

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Question - On May 10 of the current year, Kent Corporation distributes to its shareholder Rose $16000 in cash and land (a capital asset) having a 78000 FMV. The land has a 26000 adjusted basis (for both taxable income and E&P purposes) and is subject to a 90000 mortgage, which Rose assumes. Kent has an E&P balance exceeding the amount distributed and is subject to a 21 % corporate tax rate.

Required -

a. What are the amount and character of the income Rose recognizes as a result of the distribution?

b. What is Rose's basis in the land?

c. What are the amount and character of Kent's gain or loss as a result of the distribution?

Reference no: EM132894906

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