based on the following information: (Liquidations)

X adopts a plan of complete liquidation and makes the following pro rata disuibutions

to its shareholders (assume all are individuals):

B Inventory

C Inventory FMV $30,000

Basis $15,000

Mortgage $40,000

D Capital asset FMV $500

Basis $2,800

(Assume that X acquired the property distributed to D in a 351 transfer 6 months

before adopting the plan of liquidation when the FMV of the property was $800 and X co.'s

basis was $2,800).

E Capital asset FMV

Basis

of:

Each shareholder had a $1,000 basis in the X stock.

X Co.'s recognized gain or loss on the distribution

1)

A 0

B $70,000 capital gain

C $69,000 capital gain

D None of the above

2.

A 0

B $10,000 ordinary income

C $20,000 ordinary income

D None of the above

3

A $25,000 ordinary income

B $35,000 ordinary income

C $65,000 ordinary income

D None of the above