Question
25. HolyCow Corporation is liquidated, with Sneha receiving $4,000 in money and other property having a $7,000 FMV. Sneha's basis in his HolyCow stock is
25. HolyCow Corporation is liquidated, with Sneha receiving $4,000 in money and other property having a $7,000 FMV. Sneha's basis in his HolyCow stock is $6,000. Upon liquidation, Sneha must recognize a gain of
A) 0.
B) $5,000.
C) $8,000.
D) $11,000.
26. Identify which of the following statements is true.
A) A liquidating distribution of property other than a disqualified property that is made ratably to all shareholders (based on their stockholdings) will permit the recognition of loss on the portion of the distribution that is made to a related person.
B) A subsidiary corporation can recognize losses on distributions to either the parent corporation or minority shareholders in a Sec. 332 liquidation.
C) Section 336 prevents recognition of a loss when making a pro rata distribution of property to a related person.
D) All of the above are false.
27. Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation. Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year. The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation. As a result of the liquidation, Parent must recognize a
A) $300,000 gain.
B) $0 gain.
C) $200,000 gain.
D) none of the above
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