Pursuant to a Complete Liquidation, Lilac Corporation Distributes the Following

question 41

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 these.

---

Definitions:

Entrepreneurial Processes

These are the various stages and activities involved in launching, developing, and sustaining a new business or venture.

Governance Structures

Frameworks and systems through which corporations are directed and controlled, including board composition and roles.

Organizational Formalization

The degree to which an organization uses rules, procedures, and structured communication to order its activities.

Entrepreneurial Behavior

Actions and attitudes indicative of an individual's willingness to take risks and innovate in pursuit of new business opportunities.