Question: In the current year, Penelope receives a nonliquidating distribution of land from Royal Corporation. The corporation has earnings and profits of $300,000. What is the

In the current year, Penelope receives a nonliquidating distribution of land from Royal Corporation. The corporation has earnings and profits of $300,000. What is the tax effect of the distribution for Royal and for Penelope if
a. The land has a fair market value of $30,000 and a basis of $18,000?
b. The land has a fair market value of $25,000 and a basis of $35,000?

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