ACCT TAX

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. 1. How much loss can be recognized by PPK Corp. on the distribution of the inventory to Baretta? 2. What is Baretta Corp.'s tax basis for the inventorv received from PPK