The Stock of Loon Corporation Is Held as Follows: 85

question 44

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 these.

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Definitions:

Moral Therapy

A 19th-century psychiatric treatment approach focusing on humane treatment and moral discipline as a remedy for mental illness.

Somatogenic

A term referring to the origin of physical bodily disorders, suggesting that psychological conditions have a physical (somatic) cause.

Psychogenic

Pertains to physical illnesses or conditions that are believed to arise from emotional or mental stressors, rather than biological factors.

Abnormal Behaviour

Refers to patterns of emotion, thought, and action deemed pathological for one reason or another, often being statistically rare, violating norms, or causing distress.