ABC Corporation (ABC )owns 90% of the single class of stock in Subsidiary Corporation. The other 10% is owned by Rosie, an individual. ABC's basis in its Subsidiary stock is $ 200,000 and Rosie's basis is $90,000. Subsidiary distributes property A having an adjusted basis of $150,000 and an FMV of $720,000 to ABC, and property B with a FMV of $80,000 and an adjusted basis of $60,000 to Rosie in a liquidating distribution. Subsidiary had $10 million of earnings and profits at the date of liquidation. What gain or loss must ABC and Rosie recognize on the liquidating distributions ?

ABC Corporation (ABC )owns 90% of the single class of stock in Subsidiary Corporation. The other 10% is owned by Rosie, an individual. ABC's basis in its Subsidiary stock is $ 200,000 and Rosie's basis is $90,000. Subsidiary distributes property A having an adjusted basis of $150,000 and an FMV of $720,000 to ABC, and property B with a FMV of $80,000 and an adjusted basis of $60,000 to Rosie in a liquidating distribution. Subsidiary had $10 million of earnings and profits at the date of liquidation. What gain or loss must ABC and Rosie recognize on the liquidating distributions ?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 33P

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ABC Corporation ( ABC )owns 90% of the single class of stock in Subsidiary Corporation . The other 10% is owned by Rosie , an individual. ABC's basis in its Subsidiary stock is $ 200,000 and Rosie's basis is $90,000. Subsidiary distributes property A having an adjusted basis of $150,000 and an FMV of $720,000 to ABC , and property B with a FMV of $80,000 and an adjusted basis of $60,000 to Rosie in a liquidating distribution. Subsidiary had $10 million of earnings and profits at the date of liquidation. What basis do ABC and Rosie have in the property received in the liquidating distribution ? A. ABC basis in property A $200,000; Rosie's basis in property B $80,000 B. ABC's basis in property A $150,000; Rosie's basis in property B $90,000 C. ABC's basis in property A $720,000; Rosie's basis in property B $80,000 D. ABC basis in property A $150,000 ; Rosie's basis in property B $80,000 in…
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