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Tester Corporation Acquired All of the Stock of Socco Corporation

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Tester Corporation acquired all of the stock of Socco Corporation five years ago for $400,000.Socco Corporation has been completely liquidated this year,and all of its assets have been transferred to Tester Corporation.Immediately prior to the liquidation,Socco had an adjusted basis in its assets of $560,000,and the assets were worth $700,000.
a.How much gain or loss will Socco recognize due to the liquidation?
b.How much gain or loss will Tester recognize due to the liquidation?
c.What is Tester's adjusted basis in the assets received from Socco?


Definitions:

Marginal Productivity

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Perfectly Competitive

A type of market where numerous small firms compete against each other offering products that are virtually interchangeable and where no single company can dictate the market price.

Marginal Productivity

The additional output that is produced by employing one more unit of a particular input, holding other inputs constant.

Income Distribution

The way in which total income is shared among the population or different groups within society.

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