Carly Owns 25% of Base Corporation's Single Class of Stock

question 46

Multiple Choice

Carly owns 25% of Base Corporation's single class of stock and Premier Corporation owns the remaining 75%. Carly's basis in the Base stock is $200,000 and Premier Corporation's basis in the Base stock is $600,000. Carly receives property with a $175,000 adjusted basis and a $250,000 FMV and Premier Corporation receives property with a $600,000 adjusted basis and a $750,000 FMV in complete liquidation of Base Corporation. All of Base's cash is used to pay its liabilities. Which of following statements is correct concerning the tax effects of the liquidation?

• A)Neither Carly nor Premier Corporation will recognize a gain.
• B)Carly will recognize some gain but Premier Corporation will not recognize any gain.
• C)Both Carly and Premier will recognize some gain.
• D)Carly will not recognize any gain but Premier will recognize some gain.

---

Definitions:

Behavioral Therapies

A range of therapies that are used to treat mental health disorders, focusing on changing undesirable behaviors through conditioning.

Behavior Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through reinforcement strategies, without delving into underlying psychic conflicts.

Overeating

The consumption of food in quantities greater than the energy requirements of the body, often leading to weight gain and potential health issues.

Adaptive Behavior Patterns

Actions or behaviors that enable an individual to meet their needs in a specific environment, often through learning and adjustment.