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:

Electric Motor

A machine that converts electrical energy into mechanical energy, used in a wide range of applications from household appliances to vehicles.

Cable

A thick, strong rope made of wires twisted together, used for various purposes including electrical transmission, mechanical load-bearing, or communication.

Passenger Compartment

The section of a vehicle intended for the seating and protection of passengers.

HVAC System

An acronym for heating, ventilation, and air conditioning system, which provides heating and cooling to residential and commercial buildings.