Question
Packard Corporation transferred its 100 percent interest to State Company as part of a complete liquidation of the company. In the exchange, Packard received land
Packard Corporation transferred its 100 percent interest to State Company as part of a complete liquidation of the company. In the exchange, Packard received land with a fair market value of $345,000. Packard's basis in the State stock was $817,500. The land had a basis to State Company of $592,500. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives?
Multiple Choice
$247,500 loss recognized by State and a basis in the land of $345,000 to Packard.
$247,500 loss recognized by State and a basis in the land of $592,500 to Packard.
No loss recognized by State and a basis in the land of $345,000 to Packard.
No loss recognized by State and a basis in the land of $592,500 to Packard.
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