Prime Corporation Liquidates Its 85%-Owned Subsidiary Bass Corporation Under the Provisions

question 17

Multiple Choice

Prime Corporation liquidates its 85%-owned subsidiary Bass Corporation under the provisions of Secs. 332 and 337. Bass Corporation distributes land to its minority shareholder, John, who owns a 15% interest. The property received by John has a $55,000 FMV. The land was used in the Bass Corporation's business and has a $65,000 adjusted basis and is subject to a $10,000 liability, which is assumed by John. John's basis in his stock is $25,000. What gain or loss will John and Bass Corporation recognize on the distribution of the land?

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Definitions:

Design

The plan or specification for the construction of an object or system, or for the implementation of an activity or process.

Solomon Four-group Design

An experimental approach to assess the potential effects of pretesting on participants by including both pretested and non-pretested groups with and without the intervention.

Pretest Impact

The influence that prior testing might have on the participants' subsequent performance on a posttest, affecting the interpretation of an intervention's effect.

Posttest Scores

The scores obtained from tests administered after an experimental treatment or intervention to evaluate its effects.