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:

Information Sharing

The exchange of data, information, or knowledge between parties to improve understanding, decision-making, or coordination.

Supply Chain Coordination

The management of activities, resources, equipment, and information across the supply chain to ensure efficient and effective fulfillment of customer demand.

Manufacturer Orders

Requests or purchase orders placed by businesses to manufacturers for the production and supply of goods.

Milk Run

A routing strategy where a single transportation vehicle visits multiple locations on a predefined route to pick up or deliver goods, maximizing efficiency and reducing transportation costs.