Texas Corporation is undergoing a complete liquidation and distributes land to Robert, one of its shareholders, in

Question:

Texas Corporation is undergoing a complete liquidation and distributes land to Robert, one of its shareholders, in exchange for all of Robert's stock. The land has a basis of $300,000 and a FMV of $400,000 on Texas Corporation's books and is subject to a $325,000 liability.

Robert assumes the liability on the property. Robert's basis in his Texas Corporation stock is $100,000. What is the amount of gain or loss recognized by Robert on the distribution?

a. $175,000 gain

b. $25,000 gain

c. No gain or loss is recognized

d. $25,000 loss

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....