At the time of its liquidation under 332, Pink Corporation (earnings and profits of $560,000) had

Question:

At the time of its liquidation under § 332, Pink Corporation (earnings and profits of $560,000) had the following assets and liabilities:

cash ($175,000); marketable securities (fair market value of $230,000, basis of $250,000); unimproved land (fair market value of $600,000, basis of $300,000); unsecured note payable ($50,000); and mortgage on the unimproved land ($270,000). Pink Corporation also had a net operating loss carryover of $45,000. Wren Corporation acquired all of the stock of Pink Corporation seven years ago for $160,000.

1) How much gain (or loss) will Pink Corporation recognize upon the liquidating distribution of its assets and liabilities to Wren Corporation?

2) How much gain (or loss) will Wren Corporation recognize in the liquidation of Pink?

3) What basis will Wren have in the marketable securities and unimproved land it receives in the liquidation?

4) What happen to Pink's earnings and profits and net operating loss carryover?

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