Are Form 1120 Schedule M 3 Assets 2019-2024

Hello and welcome to the session in which we would look at property distribution. So, we're going to look at the property distribution on the shareholder as well as on the corporation. Now, the company is distributing not cash, it's distributing property. So, what do we need to know about property distribution? The amount distributed is equal to the fair market value of the property. So, we need to use the fair market value as the amount that's being distributed, just like cash. First, to the extent of earnings and profit, the distribution is treated as a dividend. Then, any excess is treated as a return of capital. To the extent of the basis of the stock. And any remaining amount is considered a capital gain. So, first is dividend, anything in addition and it's an excess, it's treated as a return of capital to the extent of the basis of the stock. If there's any basis of the stock, therefore the shareholder, then any remaining amount is considered a capital gain. And those are the three steps that we talked about in the previous recording: dividend, return of capital which is non-taxable, then the third amount will be considered a capital gain. And we're going to be using the fair market value as the basis. The shareholder reduces the amount distributed by any liabilities assumed by the shareholder. So, if we are distributing property with a fair market value of 80 and there is a liability attached to that property of 20,000, therefore the distribution equals 60,000. This is the net distribution. So, we would reduce the liability to arrive at the distribution amount. However, the basis of the property equals the fair market value. Now, the shareholder got an $80,000 property, the shareholder basis equals 80,000. So, the...