Lesson 5B-Objectives

After completing this lesson, students should be able to:

1.	Identify and explain the tax consequences that arise to corporations and shareholders upon the distributions of apprecaited or depreciated property with respect to stock, including the following:
	
	a.  taxable income (if any) recognized by the corporation on distribution
	b. effect on corporation's e&p and "interim" e&p
	c.  consequeces of the distribution to shareholders, including calculation of dividend, return of capital and gain.
	d.  basis and holding period of property in the hands of the shareholders  

2.	Explain the consequences to corporations and shareholders of the distribution of property subject to a liability and/or the corporation's own obligations including

	a.  taxable income recognized by the corporation on distribution
	b. effect on corporation's e&p and "interim" e&p
	c.  consequeces of the distribution to shareholders, including calculation of dividend, return of capital and gain.
	d.  basis and holding period of property in the hands of the shareholders  

3.	Understand and explain the notion of "constructive dividends," recognize when these may occur, and describe the key way in which constructive dividends between shareholders and their closely held corporations may be avoided.