During 2017,CDE Corporation (An S Corporation Since Its Inception in 2015)liquidates

question 121

Essay

During 2017,CDE Corporation (an S corporation since its inception in 2015)liquidates this year by distributing a parcel of land to its sole shareholder Clark.The fair market value of the land at the time of the distribution was $100,000 and CDE's tax basis in the property was $130,000.Before considering the effects of the distribution,Clark's basis in his CDE stock was $40,000.What amount of loss,if any,does CDE recognize on the distribution? What amount of income,if any,does Clark recognize on the distribution and what is his basis in the land?

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Definitions:

Isocost Line

A graphical representation showing all possible combinations of inputs that cost the same amount.

Capital

Refers to financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the tangible machinery and production equipment used in environments such as factories and other manufacturing facilities.

Labor

The physical and mental effort used in the production of goods and services.

Slope

In mathematics and economics, it represents the rate at which a variable changes over the change in another variable, often depicted as a line on a graph.