Rex and Felix are the sole shareholders of Dogs and Cats Corporation (DCC). After several years of operations using the accrual method, they decided to liquidate the corporation and operate the business as a partnership. Rex and Felix hired a lawyer to draw up the legal papers to dissolve the corporation, but they need some tax advice from you, their trusted accountant. They are hoping you will find a way for them to liquidate the corporation while minimizing their total income tax liability.

Rex has a tax basis in his shares of $60,000 and Felix has a tax basis in his shares of $30,000. DCC's tax accounting balance sheet at the date of liquidation is as follows:

Req A to B Req C to D Req E to F a. Compute the gain or loss recognized by Rex, Felix, and DCC on a complete liquidation of th shareholder receives a pro rata distribution of the corporation's assets and assumes a pro rat b. Compute the gain or loss recognized by DCC, Rex, and Felix on a complete liquidation of th Felix received cash in lieu of his pro rata share of assets and liabilities. ( Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if Part A Part B Gain or loss recognized by Rex Gain or loss recognized by Felix Gain or loss recognized by DCCComplete this question by entering your answers in the tabs below. Req A to B Req C to D Req E to F :c. Will Felix recognize any income when he collects the accounts receivable? d. Will Felix be able to take a deduction when he pays the accounts payable? C Accounts receivable d. Accounts payable e. Compute the gain or loss recognized by Rex, Felix, and DCC on a complete liquidation of the corporation assuming each shareholder receives a pro rata distribution of the corporation's assets and assumes a pro rata amount of the liabilities. f. Compute the gain or loss recognized by Rex, Felix, and DCC on a complete liquidation of the corporation assuming Felix receives $61,000 in cash and Rex receives the remainder of the assets and assumes all of the liabilities. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) : Show less A : Part E Part F Gain or loss recognized by Rex Gain or loss recognized by Felix Gain or loss recognized by DCC Assets Cash Accounts receivable Inventory Equipment Building Land Total assets Liabilities Accounts payable Mortgage payableBuilding Mortgage payableLand Total liabilities Shareholders' Equity Common stockRex (:6%] Common stockFelix (20%) Total shareholders equity adjusted Basis $ 66,933 46,930 46,930 94,930 46,930 2,930 $299,930 FHV $ 66,933 46,930 92,930 56,930 92,930 29,930 $372,930 $ 77,930 85,930 85,930 $247,930 $109,900 25,930 $125,930