During 2001, Loser Corporation had the following balance sheet:

Asset FMV AB

Cash $40,000 $40,000

Land A $30,000 $80,000

Land B $30,000 $20,000

Total Assets $100,000 $140,000

Capital Stock/Retained Earnings $100,000 $140,000

During this year, they made the following liquidating distributions to their shareholders:

Shares Shareholders

Shareholder Owned Property Basis in Stock

Al 600 Land A and $30,000

$30,000 cash

Baker 300 Land B $50,000

Charlie 100 $10,000 Cash $20,000

Land A was contributed by Al in 1998. Land B was purchased by the corporation in 1999.

What are the consequences of the transaction to Loser?

Would your answer change if Land A had been distributed to Baker and Land B had been distributed to Al? Why or why not?

What are the tax consequences of the distribution to Al? What basis will he take in the land?

What are the tax consequences of the distribution to Baker? What basis will he take in the land?

What are the tax consequences of the distribution to Charlie?