Parent Corporation Owns 100% of the Single Class of Stock

question 22

Multiple Choice

Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation. Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year. The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation. As a result of the liquidation, Parent must recognize a

• A)$0 gain.
• B)$200,000 gain.
• C)$300,000 gain.
• D)none of the above

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Definitions:

Proximity Effect

A principle suggesting that physical or psychological closeness between individuals increases the likelihood of forming relationships or bonds.

Immediate Neighbors

Refers to the entities or elements directly adjacent to a central point or position, often used in spatial, geographical, or network contexts.

Evolutionary Motives

The underlying biological and genetic purposes that drive behaviors, believed to aid in survival and reproduction.

Physical Health

A state of well-being in which an individual is able to perform daily activities without limitations, pain or physical restrictions, often achieved through regular exercise, healthy diet, and sufficient rest.