On January 4, 2019, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under ? 351. The shareholder?s basis, the fair market value, and the built-in gain (loss) of each property are:

Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $350,000.

a. Compute Martin?s basis in Property 1 and in Property 2 as of January 4, 2019.

b. Compute Martin?s realized and recognized loss on the liquidating distribution of Property 2.

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Shareholder's Basis Fair Market Value Bullt-In Galn (Loss) Property 1 Property 2 Net built-in loss $ 75,000 $300,000 $375,000 400,000 525,000 (125,000) ($ 50,000)