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Maroon Corporation reported taxable income of $500,000 from…
Mаrооn Cоrporаtion reported tаxable income of $500,000 from operations for this year. During the year, the company made a distribution of land to its sole shareholder, Dak Prescott. The land’s fair market value was $75,000 and its tax and E&P basis to Maroon was $25,000. Dak assumed a mortgage attached to the land of $15,000. Any gain from the distribution will be taxed at 21 percent. The company had accumulated E&P of $750,000 at the beginning of the year. Compute Maroon’s total taxable income and federal income tax. Compute Maroon’s current E&P. Compute Maroon’s accumulated E&P at the beginning of next year. What amount of dividend income does Dak report as a result of the distribution? What is Dak’s income tax basis in the land received from Maroon?