Vulture Corporation Distributes Land (Basis of $250,000, Fair Market Value

question 37

Multiple Choice

Vulture Corporation distributes land (basis of $250,000, fair market value of $475,000) to Bonita, a shareholder, to carry out a qualifying stock redemption. The land is distributed subject to a $300,000 liability. Bonita had a basis of $25,000 in the shares redeemed. With respect to the redemption:

• A)Vulture Corporation will recognize a gain of $50,000.
• B)Vulture Corporation will recognize a gain of $225,000.
• C)Bonita will recognize a gain of $450,000.
• D)Bonita will have a basis of $175,000 in land.
• E)None of the above.

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Definitions:

Manufacturers' Representatives

Individuals or businesses that sell manufacturers' products to wholesalers and retailers without taking ownership of the goods, operating on a commission basis.

Sales Administration

The process of overseeing and managing a company's sales operations, including planning, reporting, and goal setting.

Ethics

The branch of philosophy that deals with questions about morality, including the analysis of concepts like right and wrong, virtue and vice, and justice.

Pricing Strategies

Methods businesses use to set the selling price for their products or services, based on factors like cost of production, market demand, competition, and customer value perception.