Texas Corporation Is Undergoing a Complete Liquidation and Distributes Land

question 11

Multiple Choice

Texas Corporation is undergoing a complete liquidation and distributes land to Robert, one of its shareholders, in exchange for all of Robert's stock. The land has a basis of $300,000 and an FMV of $400,000 on Texas Corporation's books and is subject to a $325,000 liability. Robert assumes the liability on the property. Robert's basis in his Texas Corporation stock is $100,000. What is the amount of gain or loss recognized by Robert on the distribution?

• A)$175,000 gain
• B)$25,000 gain
• C)$25,000 loss
• D)No gain or loss is recognized.

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Definitions:

Unauthorized Acts

Actions taken by an individual or entity that have not been approved or sanctioned by the necessary authority or party.

Ratification

The process of officially sanctioning a treaty or agreement to make it legally binding.

Adoption

The legal process by which an individual assumes the parenting of another, usually a child, from that person's biological or legal parent(s).

Unauthorized Contracts

Unauthorized contracts refer to agreements made by individuals who lack the legal authority or capacity to bind themselves or another party to contractual obligations.