Robot Corporation Is Liquidated, with Marty Receiving Property Having an Adjusted

question 88

Multiple Choice

Robot Corporation is liquidated, with Marty receiving property having an adjusted basis of $60,000 and an FMV of $90,000. The property is subject to an $80,000 mortgage, which Marty assumes. Marty's basis in the Robot stock surrendered is $50,000. Marty must recognize

• A)a $40,000 loss.
• B)no gain or loss.
• C)a $60,000 gain.
• D)none of the above.

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Definitions:

Perfectly Competitive Firm

A business operating in a market where there are many buyers and sellers, all selling identical products, with no barriers to entry or exit.

Loss

A financial condition where costs exceed revenues, resulting in a negative profit.

Profit Lost

Refers to the potential earnings that were not realized due to missed or unrealized opportunities.

Sacks of Coffee

Units of measurement used in the coffee industry to quantify large quantities of coffee beans, typically weighing 60 kg each.