Last Year, Toby Made a Capital Contribution of a Pretzel

question 55

Multiple Choice

Last year, Toby made a capital contribution of a pretzel maker having a $2,000 adjusted basis and a $200 FMV to Keke Corporation in exchange for additional stock. This year, Keke Corporation adopted a plan of liquidation. Prior to the adoption of the liquidation plan, Keke had not used the pretzel maker in connection with the conduct of its trade or business. Which of the following statements is true?

• A)Keke Corporation may recognize a loss of $1,800.
• B)Keke Corporation may recognize a loss of $200.
• C)Keke Corporation's basis for determining the loss will be $2,000.
• D)Keke Corporation's basis for determining the loss will be $200.

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Definitions:

Vistaril

A brand name for hydroxyzine, an antihistamine used to treat anxiety, nausea, and allergies.

Apothecary Equivalent

A term related to the apothecary system, referring to the traditional system of weights and measures used by pharmacists to compound and dispense medication.

Milliliters

A metric unit of volume equal to one thousandth of a liter, commonly used in liquid medication dosing.

Furosemide

A medication used to treat fluid build-up and swelling caused by congestive heart failure, liver disease, or kidney disease.