Question
Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation. Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates
Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation. Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year. The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation. As a result of the liquidation, Parent must recognize a
A) $300,000 gain.
B) $0 gain.
C) $200,000 gain.
D) none of the above1.
2.
Geranova Corporation is liquidated, with Vlade receiving $7,500 in money, other property having a $5,000 FMV, and a $2,000 mortgage on the property. Vlades basis in his Geranova Co. stock is $7,000. Upon liquidation, Vlades must recognize a gain of
A) 2,000.
B) $3,500.
C) $5,000.
D) $12,500.
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