Question
The stock in Black Corporation is owned by Sam and Susan, who are unrelated. Sam owns 80% and Susan owns 20% of the stock in
The stock in Black Corporation is owned by Sam and Susan, who are unrelated. Sam owns 80% and Susan owns 20% of the stock in Black Corporation. The following assets are to be distributed in complete liquidation of Black Corporation:
| Adjusted | Fair Market |
| Basis | Value |
Cash | $300,000 | $300,000 |
Inventory | 75,000 | 100,000 |
Equipment | 200,000 | 100,000 |
a. | What gain or loss would Black Corporation recognize if it distributes the cash and equipment to Sam and the inventory to Susan? |
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b. | What gain or loss would Black Corporation recognize if it distributes the cash and inventory to Sam and the equipment to Susan? |
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