Whaler Corporation Makes a Liquidating Distribution of Land with a $70,000

question 94

Essay

Whaler Corporation makes a liquidating distribution of land with a $70,000 adjusted basis and a $100,000 FMV to shareholder Horton,who surrenders his Whaler stock (adjusted basis $60,000)to the corporation.Alice,another shareholder,receives $100,000 cash for her shares ($115,000 adjusted basis).
a.What are the tax consequences to Whaler Corporation?
b.What are the tax consequences to both Horton and Alice?
c.What is Horton's basis in the land?

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Definitions:

Discrimination

The unfair or prejudicial treatment of different categories of people or things, especially on the grounds of race, age, or sex.

Attitude

An established pattern of thoughts or feelings toward a person or thing, often influencing how an individual acts.

Behavior

The way in which an individual acts and conducts themselves, especially towards others.

Fast-food

A type of mass-produced food designed for commercial resale and with a strong priority placed on "speed of service" over other quality factors.