29 Jul WHAT AMOUNT OF LOSS WILL TOUCAN CORPORATION RECOGNIZE ON THE DISTRIBUTION OF THE PROPERTY?
Pursuant to a complete liquidation, Lilac Corporation
distributes the following assets to its unrelated shareholders: land held for
three years as an investment (basis of $300,000, fair market value of
$600,000), inventory (basis of $100,000, fair market value of $80,000), and
marketable securities held for four years as an investment (basis of $200,000,
fair market value of $240,000). What are the tax consequences to Lilac
Corporation as a result of the liquidation?
a.
Lilac Corporation would recognize no gain or loss on the
liquidation.
b.
Lilac Corporation would recognize a net capital gain of
$320,000.
c.
Lilac Corporation would recognize a net capital gain of
$340,000 and an ordinary loss of $20,000.
d.
Lilac Corporation would recognize a net capital gain of
$340,000.
e.
None of the above.
.
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