X Corps balance sheet shows the following:

BASIS FMV

Cash $10,000 $10,000

Equipment -net 40,000 50,000

Land 1 100,000 150,000

Land 2 150,000 125,000

Total $300,000 $335,000

All of the stock is owned by A. Her basis is $120,000.

Answer the following questions based on the above information.

1. Calculate the gain or loss to X Corp. if X liquidates and distributes all assets to A.
2. Calculate the gain or loss to A on the liquidation in Question A.
3. Corporation Y purchases the stock from A for $335,000. Y immediately liquidates X Corporation. How much gain or loss is recognized by X and what are the bases of the assets to Y?
4. Same facts as C except Y Corp. made a Section 338 election. Assume a corporate tax rate of 21 %.How much gain or loss is recognized and what are the bases of the assets acquired by Y?
5. What factors should a buyer and seller consider in evaluating whether to make a Section 338 election?