Indigo Corporation Has a Basis of $1 Million in the Stock

question 55

Multiple Choice

Indigo corporation has a basis of $1 million in the stock of Owl Corporation, a subsidiary in which it owns 100% of all classes of stock. Indigo purchased the stock in Owl 10 years ago. In the current year, Indigo liquidates Owl and acquires assets worth $1.2 million. At the time of its liquidation, Owl Corporation had a basis of $800,000 in the assets and E & P of $500,000. Which of the following statements is correct with respect to the liquidation?

• A) Owl recognizes a gain of $400,000.
• B) Indigo has an $800,000 basis in the assets.
• C) Owl's E & P of $500,000 is eliminated.
• D) Indigo recognizes a gain of $200,000.
• E) None of these.

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Familiarize with key Internet protocols and their functions (e.g., TCP, SMTP, POP, OpenPgP).

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Alluvial Fan

A low, gently sloping mass of sediment, shaped like an open fan or a segment of a cone; typically deposited by a stream where it exits a mountain range or joins a main stream.

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Data obtained from cylinders of ice drilled from glaciers or ice sheets, used to study past climates and atmospheric compositions.

Ice Cores

Cylinders of ice drilled from glaciers and ice caps, which are studied to understand past climate conditions through the analysis of trapped gas bubbles and particulate matter.

Desert Feature

Characteristics or remarkable landmarks found in desert landscapes, such as dunes, oasis, or rock formations.