A Corporation Distributes Land and the Related Liability in a Nonliquidating

question 89

Multiple Choice

A corporation distributes land and the related liability in a nonliquidating distribution to a shareholder. The land (a capital asset) has an adjusted basis of $70,000, an FMV of $100,000 and is subject to a mortgage of $120,000. The corporation must recognize

• A)a $20,000 capital loss.
• B)a $50,000 capital gain.
• C)a $70,000 capital gain.
• D)no gain or loss.

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