Question
Robin transferred her 60 percent interest to Cardinal Company as part of a complete liquidation of the company. In the exchange, she received land with
Robin transferred her 60 percent interest to Cardinal Company as part of a complete liquidation of the company. In the exchange, she received land with a fair market value of $940,000. Robin's basis in the Cardinal stock was $980,000. The land had a basis to Cardinal Company of $1,160,000. What amount of loss does Cardinal recognize in the exchange and what is Robin's basis in the land she receives? The distribution was non-pro rata to Robin, a related person.
Multiple Choice
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$220,000 loss recognized by Cardinal and a basis in the land of $1,160,000 to Robin
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$220,000 loss recognized by Cardinal and a basis in the land of $940,000 to Robin
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No loss recognized by Cardinal and a basis in the land of $1,160,000 to Robin
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No loss recognized by Cardinal and a basis in the land of $940,000 to Robin
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
13th International Edition
1265533199, 978-1265533199
