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Achievement Corp has 2 unrelated shareholders including Curly who owns 40% with a stock basis of $300,000, and Phoenix who owns 60%. Achievement Corporation engages

Achievement Corp has 2 unrelated shareholders including Curly who owns 40% with a stock basis of $300,000, and Phoenix who owns 60%. Achievement Corporation engages in a complete liquidation by distributing cash to Phoenix, and the following asset to Curly.

Description

FMV

Adjusted Basis

Notes

Equipment

360,000

600,000

Distributed to Curly (40% owner)

Purchased 3-years ago for use in the business for $700,000 (100,000 of depreciation taken)

  1. What amount of gain or loss does Curly recognize and what is the character of the gain or loss?
  1. What amount of gain or loss does Achievement Corp recognize and what is the character of the gain or loss?

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