Coral Corporation Transfers All of Its Assets, Basis of $440,000

question 10

Multiple Choice

Coral Corporation transfers all of its assets, basis of $440,000 and FMV of $600,000, to Maroon Corporation.Coral receives voting stock in Maroon valued at $500,000 and Maroon assumes $100,000 of Coral's liabilities.Coral distributes the Maroon voting stock to its shareholders and is liquidated.Which, if any, of the following statements regarding this transaction is correct?

• A)Coral has a realized gain of $60,000 and a recognized gain of $0.
• B)Coral has a realized gain of $60,000 and a recognized gain of $100,000.
• C)Coral has a realized gain of $160,000 and a recognized gain of $0.
• D)Coral has a realized gain of $160,000 and a recognized gain of $100,000.
• E)None of the above statements is correct.

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Definitions:

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