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:

Poverty Line

A financial threshold below which an individual or family is considered to be living in poverty, based on income.

Yearly Cash Income

The total amount of money received annually from various sources before taxes and other deductions.

Single-Parent Families

Family units consisting of one parent and his or her children, which may result from divorce, separation, death of a spouse, or unmarried parenthood.

Poverty Level

A defined threshold that determines the minimum income requirement for individuals and families to afford basic living expenses, used to identify and measure individuals' and households’ economic status.