Question

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23. Identify which of the following statements is true.

A) In general, a noncorporate shareholder that receives a distribution in complete liquidation of the liquidating corporation recognizes his or her entire realized gain as a capital gain.

B) The basis for nonmoney property received by a noncorporate shareholder as part of a liquidating distribution is the same as its basis on the books of the liquidating corporation.

C) The liquidating corporation does not recognize gains and losses when making a distribution of nonmoney property.

D) All of the above are false.

24. The stock of Delaney Corporation is 70% owned by Richard and 30% owned by Richard's sister, Kristin. During 2017, Kristin transferred property (basis of $100,000 and FMV of $120,000) as a contribution to the capital of Delaney. During May 2017, Delaney adopted a plan of liquidation and subsequently made a pro rata distribution of the property back to Richard and Kristin. At the time of the liquidation, the property had an FMV of $80,000. What amount of loss can be recognized by Delaney on the distribution of property?

A) $0

B) $30,000

C) $45,000

D) $100,000

Answer 1

Question 23

Option A) In general, a noncorporate shareholder that receives a distribution in complete liquidation of the liquidating corporation recognizes his or her entire realized gain as a capital gain.

Question 24

Option A) Delaney will recognize $ 0 loss on the distribution of the property in liquidation

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