Baretta Corp. owns 100 percent of the stock of PPK Corp., and also owns PPK Corp. debentures

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Baretta Corp. owns 100 percent of the stock of PPK Corp., and also owns PPK Corp. debentures with a face amount (and basis) of $\$ 200,000$. A plan of liquidation is adopted and PPK is liquidated under Code Sec. 332.

Pursuant to the liquidation, PPK distributes inventory with a FMV of $\$ 200,000$ and a basis of $\$ 220,000$ in cancellation of the debentures.

a. How much loss can be recognized by PPK Corp. on the distribution of the inventory to Baretta?

b. What is Baretta Corp.'s tax basis for the inventory received from PPK?

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CCH Federal Taxation 2019 Comprehensive Topics

ISBN: 9780808049081

2019 Edition

Authors: Ephraim P. Smith, Philip J. Harmelink, James R. Hasselback

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Question Posted: Feb 27, 2024 04:01 AM

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Baretta Corp. owns 100 percent of the stock of PPK Corp., and also owns PPK Corp. debentures

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a PPK Corp will recognize a loss on the distribution of inventory to Baretta The loss recognized wil...View the full answer

CCH Federal Taxation 2019 Comprehensive Topics

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