John and June, Husband and Wife, Have Owned Ruby Corporation

question 94

Essay

John and June, husband and wife, have owned Ruby Corporation for a number of years. Their basis in the Ruby stock, which they own jointly, is $200,000. The Ruby stock is Sec. 1244 stock. Ruby Corporation liquidates, and John and June receive the following from the corporation: accounts receivable, $30,000 FMV; a car, $21,000 FMV; office furniture, $11,000 FMV; and $25,000 in cash. What is the amount and character of their gain or loss?

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Definitions:

Unconditional Power

Absolute authority or control without any restrictions or conditions.

Dispose

The act of selling, transferring, or getting rid of an asset or property.

Property

Assets or rights owned by individuals or entities, which can be tangible or intangible, and are subject to ownership claims.

Lifetime

The period during which something is functional, active, or intended to last.