What the tax consequences of the distribution to catamount

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Question - Catamount Company had current and accumulated E&P of $500,000 at December 31, 20X3. On December 31, the company made a distribution of land to its sole shareholder, Caroline West. The land's fair market value was $200,000 and its tax and E&P basis to Catamount was $250,000. What the tax consequences of the distribution to Catamount in 20X3?

A) No loss recognized and a reduction in E&P of $250,000.

B) $50,000 loss recognized and a reduction in E&P of $250,000.

C) $50,000 loss recognized and a reduction in E&P of $150,000.

D) No loss recognized and a reduction in E&P of $200,000.

Reference no: EM133048634

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