The Stock of Cardinal Corporation Is Held as Follows: 85

question 80

Multiple Choice

The stock of Cardinal Corporation is held as follows: 85% by Blue Jay Corporation (basis of $800,000) and 15% by Samuel (basis of $60,000) .Cardinal Corporation is liquidated on October 20,2008,pursuant to a plan adopted on January 9,2008.Pursuant to the liquidation,Cardinal Corporation distributed Asset A (basis of $550,000,fair market value of $850,000) to Blue Jay,and Asset B (basis of $200,000,fair market value of $150,000) to Samuel.No election is made under § 338.With respect to the liquidation of Cardinal:

• A)Blue Jay recognizes a gain of $50,000.
• B)Blue Jay has a basis in Asset A of $850,000.
• C)Cardinal Corporation recognizes a loss of $50,000.
• D)Samuel recognizes a gain of $90,000.
• E)None of the above.