Ball Corporation Owns 80% of Net Corporation's Stock and Jack $$\begin{array} { | l | l | } \hline \text { Ball } & \text { Jack } \\\hline \$ 0 & \$ 0 \\\hline\end{array}$$

question 82

Multiple Choice

Ball Corporation owns 80% of Net Corporation's stock and Jack owns the remaining 20% of Net Corporation's stock. Ball's basis in the Net stock is $200,000 and Jack's basis in the Net stock is $100,000. Under a plan of complete liquidation, Ball Corporation receives property with an adjusted basis of $400,000 and an FMV of $800,000 and Jack receives property with an adjusted basis of $50,000 and an FMV of $200,000. Ball and Jack's recognized gains on the liquidation are:

• A) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 0 & \$ 0 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 0 & \$ 100,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 200,000 & \$ 50,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Ball } & \text { Jack } \\
• \hline \$ 600,000 & \$ 100,000 \\
• \hline
• \end{array}\]

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Definitions:

Market Income

The amount of income earned by an individual or company without any government transfers.

Quintile

A statistical value dividing a data set into five equal parts, each representing 20% of the population being studied.

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A joint federal and state program that helps with medical costs for some people with limited income and resources.

Disabled Persons

Individuals who have a physical, mental, intellectual, or sensory impairment which, in interaction with various barriers, may hinder their full and effective participation in society on an equal basis with others.