Key Corporation Distributes a Patent with an Indeterminable Value to Gary

question 62

Multiple Choice

Key Corporation distributes a patent with an indeterminable value to Gary as part of a plan of complete liquidation. In addition, Gary receives $40,000 cash and land with a $70,000 FMV and a $30,000 adjusted basis. Gary's basis in the Key stock (a capital asset) surrendered is $120,000. If Gary relies on the open transaction doctrine, at the liquidation date he must recognize a

• A)$0 gain.
• B)$10,000 capital loss.
• C)$30,000 capital loss.
• D)$70,000 capital gain.

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Definitions:

Infant

A very young child, typically under one year of age, in the early stages of development.

Mittens

Hand coverings that encase the four fingers together and the thumb separately, often used to provide warmth in cold weather.

Layer Clothing

Wearing multiple layers of clothing for protection against varying environmental conditions or for body temperature regulation.

Pedal Pulse

The pulse felt at the top of the foot, used to assess circulation to the lower extremities.