Liquidations

X co. is and has always been owned as follows:

P Co.80%A20%

P co.'s basis in its X co. stock is $20,000.

A's basis in her X co. stock is $5000.

P co. and A are unrelated.

X co. has the following capital assets:

Property #1FMV$10,000Basis$5,000Mortgage$2,000Property #2FMV$15,000Basis$25,000Mortgage$5,000

X co. is completely liquidated pursuant to Code 332, and Property #1 and Property #2 are distributed simultaneously to P co. and A, respectively.

1) Due to the distribution of Property #1 to P co., X co. will recognize?

$5,000 capital gain.

No gain or loss.

None of these.

$7,000 capital gain.

2) Due to the distribution of Property #2 to A, X co. will recognize?

None of these.

<$5,000> capital loss.

<$10,000> capital loss.

No gain or loss.

3) P co.'s recognized gain or loss is?

No gain or loss.

$12,000 capital loss.

None of these.

$10,000 capital loss.

4) P co.'s basis in Property #1 is?

None of these.

$20,000.

$15,000.

$5,000.

5) A's recognized gain or loss is?

$5,000 capital gain.

None of these.

$10,000 capital gain.

No gain or loss.

6) A's basis in Property #2 is?

$15,000.

$5,000.

None of these.

$25,000.