The Stock of Loon Corporation Is Held as Follows: 85

question 26

Multiple Choice

The stock of Loon Corporation is held as follows: 85% by Duck Corporation and 15% by Gerald, an individual. Loon Corporation is liquidated in December of the current year, pursuant to a plan adopted earlier in the year. Loon Corporation distributes land with a basis of $350,000 and fair market value of $390,000 to Gerald in liquidation of his stock interest. Gerald had a basis of $200,000 in his Loon stock. How much gain will Loon Corporation recognize in this liquidating distribution?

• A) $0
• B) $40,000
• C) $190,000
• D) $390,000
• E) None of the above

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Definitions:

Leukemia

A cancer form that hits the blood and bone marrow, resulting in the rampant production of atypical white blood cells.

Digestive System

The digestive system is a group of organs working together to convert food into energy and basic nutrients to feed the entire body.

Colles' Fracture

A type of fracture of the distal radius in the forearm with dorsal (rearward) displacement of the wrist and hand.

Distal End

The part of a limb or structure furthest from the body's midline or the point of attachment.