1- Fact Pattern for Questions 21 and 22. EFG, Inc. is a calendar year corporation. EFG, Inc. had current earnings and profits of $100,000 and no accumulated earnings and profits when it made a nonliquidating distribution of a total of $160,000 equally to its two equal shareholders, Jane and Joe. On the date of the cash distribution, Janes basis in her EFG, Inc. stock was $10,000 and Joes basis in his EFG, Inc. stock was $35,000. What is Joes adjusted basis in his EFG, Inc. stock after the distribution?

A. $0.

B. $5,000.

C. $15,000.

D. $35,000.

2- The stock of Kenny Corp. is owned equally by two brothers. During 2008, they transferred land (which had a basis of $300,000 and a fair market value of $320,000) as a contribution to capital to Kenny Corp. During September, 2014, Kenny Corp. adopted a plan of complete liquidation and in December 2014 made a pro rata distribution of land back to the brothers. At the time of the liquidating distribution, the land had a fair market value of $180,000. What amount of loss can be recognized by Kenny Corp. on the distribution of land?

A. $0.

B. $20,000.

C. $120,000.

D. $140,000.

3- Lucinda owns 1,100 shares of Old Corporation stock at a time when Old Corporation has 2,000 shares of stock outstanding. The remaining shareholders are unrelated to Lucinda. The corporation redeems 400 shares from Lucinda. Does the transaction qualify as substantially disproportionate redemption as to Lucinda?

A. We do not have sufficient information.

B. No.

C. Yes.

D. This is not a transaction that could qualify for sale or exchange treatment.