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:

Human Condition

The characteristics, key events, and situations which compose the essentials of human existence, such as birth, growth, emotionality, aspiration, conflict, and mortality.

Phenotypic Plasticity

The capacity of a living entity to alter its physical characteristics as a reaction to varying environmental conditions.

Genetic Engineering

A field of biotechnology that involves directly manipulating the genes of organisms to modify or improve specific characteristics or produce desired products.

Dominant Genes

Genes that express their trait even when only one copy is present, overpowering recessive genes in determining certain characteristics.