The Stock in Crimson Corporation Is Owned by Angel and Melawi

question 29

Essay

The stock in Crimson Corporation is owned by Angel and Melawi, who are unrelated. Angel owns 60% and Melawi owns 40% of the stock. All of Crimson Corporation's assets were acquired by purchase. The following assets are to be distributed in complete liquidation of Crimson Corporation:
$\begin{array}{lrr}&\text { Adjusted } & \text { Fair Marke } \\&\text { Basis } & \text { Value }\\\text { Cash } & \$ 300,000 & \$ 300,000 \\\text { Inventory } & 110,000 & 100,000 \\\text { Equipment } & 180,000 & 200,000 \\\text { Land } & 460.000 & 400,000\end{array}$
a. What gain or loss, if any, would Crimson Corporation recognize if it distributes the cash, inventory, and equipment to Angel and the land to Melawi?
b. What gain or loss, if any, would Crimson Corporation recognize if it distributes the equipment and land to Angel and the cash and inventory to Melawi?

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Definitions:

Place Theory

A theory in hearing that proposes different areas of the cochlea are activated by different frequencies of sounds, contributing to the perception of pitch.

Oval Window

A membrane-covered opening that leads from the middle ear to the vestibule of the inner ear and is involved in the process of hearing.

Tympanic Membrane

A thin membrane that separates the outer ear from the middle ear and vibrates in response to sound waves, also known as the eardrum.

Basilar Membrane

A critical structure in the inner ear, it plays a key role in the mechanical process that translates sound vibrations into neural signals.