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What is the tax implications relative to the distribution

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Question - Company X would like to make a property distribution (dividend) of the three (3) machines utilized within the business. Two of these machines are no longer required by the business. However, the FMV of each machine is $20,000 and the basis of each machine is as follows: Machine One - $27,000; Machine Two- $20,000 and Machine Three - $12,000.

Why can't the corporation sell the property with the gain/losses and recognize the gain or loss on its books, and then distribute the cash to the shareholders?

What is the tax implications relative to the distribution of property by a corporation?

Reference no: EM132346514

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