Robot Corporation Is Liquidated, with Marty Receiving Property Having an Adjusted

question 88

Multiple Choice

Robot Corporation is liquidated, with Marty receiving property having an adjusted basis of $60,000 and an FMV of $90,000. The property is subject to an $80,000 mortgage, which Marty assumes. Marty's basis in the Robot stock surrendered is $50,000. Marty must recognize

• A)a $40,000 loss.
• B)no gain or loss.
• C)a $60,000 gain.
• D)none of the above.

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Definitions:

Direct Labor Rate Variance

The difference between the actual labor rate paid to workers and the standard labor rate, multiplied by the total hours worked.

Direct Labor Hours

The total hours worked by employees directly involved in manufacturing a product or delivering a service.

Actual Rate

The current interest rate or the actual cost rate in various financial and business contexts.

Standard Rate

A predetermined rate often used for allocating costs to activities or products, based on budgeted or historical data.