Austin owns 100% of the stock

Austin owns 100% of the stock of MoJo Corp., which is a calendaryear S corporation. MoJo has been an S corp for 12 years, but was aC corp prior to that. At the beginning of 20×1, MoJo has anAccumulated Adjustments Account of $200,000 and AccumulatedEarnings and Profits from C-Corp years of $500,000. Austin has astock basis of $300,000 on January 1, 20×1. MoJo has income of $0in 20×1 ignoring any effect of distributions. MoJo distributesEvilacre, a plot of land held as an investment, to Austin during20x1. MoJo has a basis of $600,000 in Evilacre and Evilacre has afair market value of $800,000 on the date of distribution. What isAustin’s taxable income from these events (including any K1 incomepassing through to Austin)?

A. $200,000 capital gain; $400,000 dividend

B. $200,000 capital gain; $500,000 dividend

C. $500,000 dividend only

D. $500,000 capital gain only

E. None of the above answers are correct


Answer : B. $200,000 capital gain; $500,000dividend


1. Calculation ofCapital Gain

Mojo’s basis in Evilace is$600,000

Fair market on the date ofdistribution is $800,000

· Capital Gain = Fair Market Value –Basis

                  = 800,000 – 600,000

                  = 200,000

The plot of land Evilace held as aninvestment in Austin during 20×1 andMojo is an S corporation during that period. Therefore notax effect is going too held. Austin is eligible for total part ofthe Capital Gain. ie. $ 200,000.

2. Dividend

Austin has a basis on Mojo as onJanuary 1, 20×1 (Mojo as a S Corporation) $ 300,000 and Mojo’saccumulated adjustment account is $ 200,000.

As per the problem mentioned Austinowns 100% of the stock of MoJo Corp as an S Corporation, same havebalance from C corporation $500,000    

"Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!"
Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes