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Turnip, Inc., a C corporation, distributes a tract of land held as an investment (FMV =...

  1. Turnip, Inc., a C corporation, distributes a tract of land held as an investment (FMV = $82,000, basis = $22,000) to Chang, its majority (60%) shareholder in exchange for all of his stock. The land is subject to a liability of $100,000. Turnip, Inc. has accumulated E & P of $50,000 and a marginal tax rate of 21%. Chang’s basis in his Turnip’s stock is $20,000 and has an individual marginal tax rate of 32%, a long-term capital gains tax rate of 15%, and $100,000 of other long-term capital gains. The distribution qualifies as a corporate liquidation. Chang has held his stock for three years. What is the tax impact of the distribution to Turnip, Inc.?   
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