Under a Plan of Complete Liquidation, Key Corporation Distributes Land

question 50

Multiple Choice

Under a plan of complete liquidation, Key Corporation distributes land (not a disqualified property) with an adjusted basis of $410,000 and an FMV of $300,000 for all Sharon's stock. Sharon's basis in her 5% interest in the Key stock is $250,000. Find Sharon's basis in the land and Key Corporation's recognized gain or loss.

• A) \[\begin{array} { | l | l | }
• \hline \text { Basis } & \text { RecognizedGain/Loss } \\
• \hline \$ 300,000 & \$ 110,000 \text { loss } \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Basis } & \text { RecognizedGain/Loss } \\
• \hline \$ 250,000 & \$ 110,000 \text { loss } \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Basis } & \text { RecognizedGain/Loss } \\
• \hline \$ 250,000 & \$ 0 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Basis } & \text { RecognizedGain/Loss } \\
• \hline \$ 300,000 & \$ 0 \\
• \hline
• \end{array}\]

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Definitions:

Selective Attention

This is the process by which a person focuses on one or a few select stimuli while ignoring other stimuli.

Intentions

Mental states that represent a commitment to carrying out an action or actions in the future, reflecting planning and purpose.

Motives

Internal drives or reasons that prompt individuals towards specific actions or behaviors.

Critical Thinking

The process of analyzing facts to make a judgment.