Answer:
The shareholder's dividend income = fair market value - mortgage value = $246,000 - $74,415 = $171,585
The shareholder's basis in the property received = fair market value = $246,000
Explanation:
Even though Global has enough earnings and profits to distribute dividends (it cannot distribute dividends if it didn't make a profit or doesn't have retained earnings), it might not have enough cash available to do so. This way the company is fulfilling its obligations with its shareholder while not using its cash reserves.
