Parent Corporation Owns All of Subsidiary Corporation's Stock

question 97

Multiple Choice

Parent Corporation owns all of Subsidiary Corporation's stock. In addition, Parent Corporation owns $100,000 (face amount and basis) of Subsidiary Corporation's bonds. When Subsidiary Corporation is completely liquidated, it distributes property with a $70,000 adjusted basis and a $100,000 FMV to Parent Corporation in redemption of the Subsidiary Corporation bonds. Following the liquidation, Parent Corporation will have a basis in the Subsidiary Corporation property received for the bonds of

• A) $0.
• B) $100,000.
• C) $70,000.
• D) none of the above

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Definitions:

Gestalt Theory

A psychological theory proposing that the human mind tends to perceive objects not by their individual parts but as whole systems.

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