Pursuant to a Complete Liquidation, Lilac Corporation Distributes the Following

question 71

Multiple Choice

Pursuant to a complete liquidation, Lilac Corporation distributes the following assets to its unrelated shareholders: land held for three years as an investment (basis of $300,000, fair market value of $600,000) , inventory (basis of $100,000, fair market value of $80,000) , and marketable securities held for four years as an investment (basis of $200,000, fair market value of $240,000) . What are the tax consequences to Lilac Corporation as a result of the liquidation?

• A) Lilac Corporation would recognize no gain or loss on the liquidation.
• B) Lilac Corporation would recognize a net capital gain of $320,000.
• C) Lilac Corporation would recognize a net capital gain of $340,000 and an ordinary loss of $20,000.
• D) Lilac Corporation would recognize a net capital gain of $340,000.
• E) None of the above.

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