A Corporation Distributes Land and the Related Liability in a Nonliquidating

question 42

Multiple Choice

A corporation distributes land and the related liability in a nonliquidating distribution to a shareholder. The land (a capital asset) has an adjusted basis of $70,000, an FMV of $100,000 and is subject to a mortgage of $120,000. The corporation must recognize

• A) a $70,000 capital gain.
• B) no gain or loss.
• C) a $20,000 capital loss.
• D) a $50,000 capital gain.

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Definitions:

Obliging

A conflict management style characterized by attempting to minimize differences and emphasizing commonalities to satisfy the concerns of the other party.

Conflict Style

A person's typical approach to handling disagreements, ranging from avoidant to collaborative strategies.

Competitiveness

The desire to win or be more successful than others.

Calm Persistence

The approach of steadily and patiently continuing with an action or stance, even in the face of obstacles or opposition, without showing agitation.