Copper Corporation (E & P of $1

question 115

Multiple Choice

Copper Corporation (E & P of $1.2 million) distributes land (basis of $410,000, fair market value of $650,000) to Lauren, a shareholder, to carry out a qualifying stock redemption. Lauren had a basis of $90,000 in the shares redeemed. Which of the following is an incorrect statement regarding the redemption?

• A) If the land is distributed subject to a $500,000 liability, Copper Corporation will recognize a gain of $240,000.
• B) If the land is distributed subject to a $500,000 liability, Lauren will have a basis in the land of $650,000.
• C) If the land is distributed subject to a $500,000 liability, Lauren will recognize a gain of $60,000.
• D) If the land is distributed subject to a $700,000 liability, Copper Corporation will recognize a gain of $290,000.
• E) None of the above.

---

Definitions:

Crine

Crine is a suffix used in biology and medicine to denote secreting, related to glands and substances they release, such as endocrine (hormone-secreting) or exocrine (substance-secreting through ducts).

Gen

Short for generation, referring to a distinct group within a defined time period sharing similar age and characteristics.

Cidal

Relating to agents or processes that kill cells or organisms, used commonly in the context of antibiotics or antiseptics.

Blast

A sudden and violent release of energy, often resulting in an explosion, or in biology, a precursor cell that can differentiate into various types of cells.