Purple Corporation Has Two Equal Shareholders, Joshua and Ellie, Who

question 40

Multiple Choice

Purple Corporation has two equal shareholders, Joshua and Ellie, who are father and daughter. One year ago, the two shareholders transferred properties to Purple in a § 351 exchange. Joshua transferred land (basis of $600,000, fair market value of $450,000) and securities (basis of $70,000, fair market value of $250,000) , and Ellie transferred equipment (basis of $420,000, fair market value of $700,000) . In the current year, Purple Corporation adopts a plan of liquidation, sells all of its assets, and distributes the proceeds pro rata to Joshua and Ellie. The only loss realized upon disposition of the properties was with respect to the land that had decreased in value to $310,000 and was sold for this amount. Purple never used the land for any business purpose during the time it was owned by the corporation. What amount of loss can Purple Corporation recognize on the sale of the land?

• A) $0
• B) $140,000
• C) $150,000
• D) $290,000
• E) None of these.

---

Definitions:

Same-Gender

Relating to or involving individuals of the same sex.

Other-Gender

A term used to refer to genders other than the one a person identifies with, especially in contexts discussing gender diversity and inclusivity.

Sexually Harassed

Experiencing unwelcome sexual advances, requests for sexual favors, or other verbal or physical conduct of a sexual nature.

LGBT Students

Learners who identify as lesbian, gay, bisexual, transgender, or questioning, facing unique social and educational challenges.