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Walker Corporation distributes to its shareholder Brayden (an individual s/h) a piece of land with...

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Accounting

  1. Walker Corporation distributes to its shareholder Brayden (an individual s/h) a piece of land with FMV $1,000,000. Walker purchased the land ten years ago for $600,000. Walkers current E&P is $200,000 and its accumulated E&P is $50,000. Braydens stock basis is $475,000. Brayden owns 85 shares (85%) of Walker Corporation. The remaining 15 shares (25%) are owned by an unrelated party. (6.5 Points)
  1. What are the tax consequences to Walker Corp and Brayden if this is a nonliquidating distribution?
  2. What are the tax consequences to Walker Corp and Brayden if this is a liquidating distribution instead?
  3. What are the tax consequences to Walker Corp and Brayden if this is a stock redemption instead and in exchange for the land Walker Corp redeems 51 of Braydens shares?
  4. If you were advising Walker Corp and Brayden on scenarios a-c listed above, which scenario would you advise them to proceed with and why?

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