Carly Owns 25% of Base Corporation's Single Class of Stock

question 14

Multiple Choice

Carly owns 25% of Base Corporation's single class of stock and Premier Corporation owns the remaining 75%. Carly's basis in the Base stock is $200,000 and Premier Corporation's basis in the Base stock is $600,000. Carly receives property with a $175,000 adjusted basis and a $250,000 FMV and Premier Corporation receives property with a $600,000 adjusted basis and a $750,000 FMV in complete liquidation of Base Corporation. All of Base's cash is used to pay its liabilities. Which of following statements is correct concerning the tax effects of the liquidation?

• A) Carly will not recognize any gain but Premier will recognize some gain.
• B) Carly will recognize some gain but Premier Corporation will not recognize any gain.
• C) Neither Carly nor Premier Corporation will recognize a gain.
• D) Both Carly and Premier will recognize some gain.

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Definitions:

Sex Differences

Variations between males and females that can be attributed to biological and physiological factors.

Attention Deficit Hyperactivity Disorder

A neurodevelopmental disorder characterized by patterns of inattention, hyperactivity, and impulsivity that interfere with functioning or development.

Inattention

The lack of focus or paying attention, often evident in various contexts such as learning environments, leading to difficulties in completing tasks.

Impulsiveness

A tendency to act on urges and desires without considering the long-term consequences, often leading to hasty or risky decisions.