Lake Corporation Distributes a Building Used in Its Business to Sandy

question 25

Essay

Lake Corporation distributes a building used in its business to Sandy in exchange for all of her Lake stock. Sandy's basis in her stock is $30,000 and the property she receives has a $90,000 FMV. As part of the distribution, Sandy assumes a liability associated with the property of $65,000. The property's basis prior to the liquidating distribution was $25,000. What are the tax consequences of the distribution to Sandy? To Lake Corporation?

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Definitions:

Informative Power

The capability of a message or source to significantly increase a recipient's understanding of a topic or issue.

Parallelism

The use of similar structures in writing or speech to create a balance and enhance readability or impact.

Lists

Ordered collections of items, information, or tasks, often used for organization, referencing, or planning purposes.

Simplify

To make something easier to understand or do by reducing its complexity or breaking it down into more manageable parts.