Question
Marcia is a 50 percent shareholder of Chevez Corp., which is in the process of liquidation. Marcias basis for her stock is $25,000. Chevezs balance
Marcia is a 50 percent shareholder of Chevez Corp., which is in the process of liquidation. Marcias basis for her stock is $25,000. Chevezs balance sheet on the date of liquidation is as follows:
Assets Basis Value
Cash $32,000 $32,000
100 shares of Public Co. 20,000 6,000
Accounts receivable 200,000 170,000
Land 50,000 300,000
Building (depreciated straight line) 246,000 500,000
Totals $548,000 $1,008,000
Equities Value
Mortgage on real estate $310,000
Unsecured liabilities 182,000
Capital stock 10,000
Paid-in capital 30,000
Earnings and profits 16,000
Total $548,000
If Marcia receives her 50 percent share of all assets and liabilities, determine her gain and her basis in each asset received as a result of the liquidation. Assume that Chevezs tax rate is 21 percent but that no tax was paid by Chevez.
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