Whaler Corporation Makes a Liquidating Distribution of Land with a $70,000

question 94

Essay

Whaler Corporation makes a liquidating distribution of land with a $70,000 adjusted basis and a $100,000 FMV to shareholder Horton,who surrenders his Whaler stock (adjusted basis $60,000)to the corporation.Alice,another shareholder,receives $100,000 cash for her shares ($115,000 adjusted basis).
a.What are the tax consequences to Whaler Corporation?
b.What are the tax consequences to both Horton and Alice?
c.What is Horton's basis in the land?

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Definitions:

Middle Ear

The portion of the ear containing the ossicles, which connect the eardrum to the oval window and amplify sound waves.

Cochlea

The fluid-filled, snail-shaped, bony chamber in the inner ear that contains the basilar membrane and its hair cells (the sound receptors).

Basilar Membranes

A structure in the cochlea of the inner ear that vibrates in response to sound, playing a key role in the sensory coding of auditory signals.

Tectorial Membranes

A structure in the cochlea of the inner ear that is involved in the auditory sensing process, by interacting with hair cells to facilitate hearing.