Question - A corporation has one shareholder owning 100% of its stock. The corporation has $1 Million Earnings and Profits. The tax C corporation distributes a patent to the shareholder. The patent has $250,000 fair market value and has a $25,000 tax cost (basis) at the corporate level.
What is the tax consequences to the corporation if any?
What is the tax consequences to the shareholder?
What tax cost (basis) does the shareholder have in the patent?