• Sliver and Heirs, Inc., has several employees. Their names and salaries are listed below:
  • Heather-$470,000
  • Kyler-$100,000
  • Sophia-$100,000
  • Richard-$320,000
  • Kyler and Sophia are the only shareholders of Silver and Heirs, Inc. Heather and Richard share equally in the management of the company’s operation. Kyle and Sophia are both full-time college students at a university 500 miles away. Silver has substantial E&P and has never distributed a dividend. Discuss any problems related to Silver’s salary arrangement

Katsu Corp. distributes property to its shareholders as part of a complete liquidaton. The fair market

value of the property is $500,000, Katsu’s adjusted basis in the property is $150,000, and the

property is subject to a liability of $200,000. What amount of gain will Katsu recognize as a result of

the transacton?