Under section 332, at the time of liquidation, Cargo Corporation -E&P of $500,000- had the following assets and liabilities:

Cash $175,000

Marketable Securities - FMV of $230,000, basis of $250,000 -

Unimproved land - FMV of $600,000, basis of $300,000 -

Unsecured payable $50,000

Mortgage on the unimproved land $270,000

Cargo Corporation also had a net operating loss carryover of $45,000. Wright Corporation acquited all of the stock of Cargo Corp. 7 years ago for $160,000.

a. How much gain or loss will Cargo Corp. recognize in the liquidating distribution of its assets and liabilities to Wright Corp.?

b.How much gain or loss will Wright Corp. recognize in the liquidation of Cargo Corp.?

c.What basis will Wrigh Corp. have in the marketable securities and unimproved land it receives in the liquidation?

d.What happens to Cargo's E&P and net operation loss carryover?

	Wright	Cargo
REALIZED	Parent	Subsidiary
FMV Received
- Basis Given Up
Tax Gain Realized
RECOGNIZED & DEFERRED
Tax Gain Realized
- Deferred Gain under