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?

---

Definitions:

Chemotaxis

The movement of an organism or cell towards or away from a chemical stimulus.

Sickle-Cell Anemia

A genetic blood disorder characterized by the production of abnormal hemoglobin, which leads to misshapen red blood cells.

Capillaries

The smallest blood vessels in the body, facilitating the exchange of oxygen, carbon dioxide, and other nutrients and waste between blood and tissues.

Tissue Damage

Injury or harm to bodily tissues due to trauma, disease, or exposure to harmful agents, resulting in disruption of structure and function.