Spring Corporation owns 100% of Fall Corporation's single class of stock. Its adjusted basis for the stock is $300,000. After adopting a plan of liquidation, Fall distributes the following property to Spring money, $40,000; LIFO inventory, $200,000 FMV; and equipment, $85,000 FMV. The inventory has a $140,000 adjusted basis. The equipment originally cost $280,000. Fall has claimed depreciation of $230,000 on the equipment. Fall has a $180,000 E&P balance and a $90,000 NOL carryover on the liquidation date.

Read the requirements.

Requirement a. What are the amount and character of Fall's recognized gain or loss when it makes the liquidating distributions? Fall does not recognize recognizes the $nothing gain realized on the distribution to Spring per Sec. 331 Sec. 332(a). Sec. 334(b)(1) Sec. 337(a). Requirement b. What are the amount and character of SpringSpring's recognized gain or loss on its surrender of the FallFall stock? SpringSpring does not recognize recognizes the $nothing gain realized on the distribution received per Sec. 331 Sec. 332. Sec. 334(b)(1) Sec. 337(a). Requirement c. What is SpringSpring's basis in each noncash property?

Inventory Equipment

Requirement d. What happens to FallFall's E&P balance and NOL carryover following the liquidation? FallFall's E&P balance and NOL disappear per Sec. 331. disappear per Sec. 381(a). carry over to Spring per Sec. 331. carry over to Spring per Sec. 381(a). Requirement e. What happens to SpringSpring's $ 300 comma 000$300,000 basis in the FallFall stock? SpringSpring's basis for the stock carry over to Fall. disappears. is increased by the distribution amount. remains the same.