What is net effect of transaction on Alpha Corporation

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Reference no: EM132708245

Question - The Alpha Corporation owns a building with a basis of $20,000 that is subject to a debt of $80,000. The FMV of the building is $50,000. Alpha distributes the property in a nonliquidating distribution (along with the debt) to Jen, its sole shareholder. What is the net effect of this transaction on Alpha Corporation's E&P?

a. $60,000 increase.

b. $60,000 decrease.

c. $20,000 decrease.

d. $30,000 increase.

e. none of the above.

Reference no: EM132708245

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