13 Multiple Choice 3 points Montclair Corporation had available (current and accumulated combined) E&P of $500,000 at December 31, 20X3 before considering the impact of the following distribution. On December 31, the company made a distribution of land to its sole shareholder, Molly Pitcher. The land's fair market value was $200,000 and its tax and E&P basis to Montclair was $50,000. Molly assumed a liability of $25,000 attached to the land. The tax consequences of the distribution to Montclair in 20X3 would be: O A. No gain recognized and a net reduction in E&P of $200,000 B. $150,000 gain recognized and a net reduction in E&P of $50,000 C. $150,000 gain recognized and a net reduction in E&P of $25,000 O D. No gain recognized and a net reduction in E&P of $175,000 14 Multiple Choice 3 points Before considering the distribution noted below, Husky, Inc. has $0 in current E&P and $0 in accumulated E&P. Husky distributes land with a fair market value of $100,000 and a tax and E&P basis of $20,000 to its sole shareholder, Jonathan. Before the distribution, Jonathan had a tax basis in his Husky stock of $60,000. The tax consequences of the distribution to Jonathan would be: O A $0 dividend, $60,000 return of basis; $40,000 capital gain B. $100,00 dividend C. $80,000 dividend; $20,000 return of basis O D. $0 dividend, $50,000 return of basis Multiple Choice