Toby Made a Capital Contribution of a Pretzel Maker Having

question 81

Multiple Choice

Toby made a capital contribution of a pretzel maker having a $2,000 adjusted basis and a $200 FMV to Keke Corporation in exchange for additional stock last year. Later that same year, Keke sold the pretzel maker for $300. This year, Keke adopted a plan of liquidation. Previously, Keke had never used the pretzel maker in connection with the conduct of its trade or business. The sale was reported on Keke's current tax return. What reporting option does Keke Corporation not have because of its plan of liquidation?

• A)File an amended tax return for the tax year in which the tax loss was originally claimed.
• B)Recapture the loss on the tax return for the year the plan for liquidation was adopted.
• C)Recognize a gain of $100 for the current year.
• D)none of the above

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Definitions:

Drive-Reduction Theory

A theory in psychology that proposes that psychological needs create an aroused state that drives an organism to reduce that need by engaging in some behavior.

Biological Factors

Refer to the genetic, neurological, and physiological conditions that affect human behavior and mental processes.

Ventromedial Hypothalamus

A region of the brain that regulates hunger and satiety signals, playing a key role in body weight and eating behavior.

Lateral Hypothalamus

A region of the hypothalamus in the brain known to control hunger and thirst mechanisms.