Charlene and Dennis Each Own 50% of Brewster Corporation and Have

question 29

Essay

Charlene and Dennis each own 50% of Brewster Corporation and have owned it for five years. The adjusted bases of their Brewster stock are $80,000 and $40,000 respectively. Brewster Corporation liquidates and distributes $60,000 to Charlene in exchange for her stock. It distributes a parcel of land with a $140,000 FMV which is subject to a $90,000 mortgage to Dennis in exchange for his stock. Dennis assumes the mortgage and also receives $10,000 in cash.
a)What is the character and amount of each shareholder's gain or loss?
b)What is each shareholder's basis in the property received in the liquidation?

---

Definitions:

Earth Processes

The dynamic and interrelated actions of physical and chemical phenomena that occur within the Earth's interior and on its surface, shaping the planet's geology.

Thermoelectric Power

Thermoelectric power refers to electricity generated by converting heat energy directly into electric energy through the use of thermoelectric materials which create voltage when there is a difference in temperature.

Irrigation

A method for supplying water to agricultural crops by artificial means to support their growth.

Livestock

Domesticated animals raised in an agricultural setting to produce commodities such as meat, milk, wool, and leather.