Lake Corporation Distributes a Building Used in Its Business to Sandy

question 25

Essay

Lake Corporation distributes a building used in its business to Sandy in exchange for all of her Lake stock. Sandy's basis in her stock is $30,000 and the property she receives has a $90,000 FMV. As part of the distribution, Sandy assumes a liability associated with the property of $65,000. The property's basis prior to the liquidating distribution was $25,000. What are the tax consequences of the distribution to Sandy? To Lake Corporation?

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Definitions:

Association Areas

Regions of the brain that integrate information from different sensory inputs and are involved in complex cognitive processes.

Sensory

Relating to or involving the senses (sight, hearing, taste, touch, and smell).

Motor

Relates to the physiological movement or the mechanism driving a system or part of the body, especially those relating to muscles.

Limbic System

A complex system of nerves and networks in the brain, controlling basic emotions and drives.