After a Plan of Complete Liquidation Has Been Adopted, Condor

question 9

Multiple Choice

After a plan of complete liquidation has been adopted, Condor Corporation sells its only asset, land (basis of $220,000) , to Eduardo (an unrelated party) for $300,000.Under the terms of the sale, Condor Corporation receives cash of $50,000 and Eduardo's notes for the balance of $250,000.The notes are payable over the next five years ($50,000 per year) and carry an appropriate interest rate.Immediately after the sale, Condor Corporation distributes the cash and notes to Maria, the sole shareholder of Condor Corporation.Maria has a basis of $30,000 in the Condor stock.The installment notes have a value equal to their face amount.If Maria wishes to defer as much gain as possible on the transaction, which of the following is correct?

• A)Condor Corporation recognizes no gain or loss on the distribution of the installment notes.
• B)Maria recognizes a gain of $20,000 in the year of liquidation.
• C)Maria recognizes a gain of $45,000 in the year of liquidation.
• D)Maria recognizes a gain of $270,000 in the year of liquidation.
• E)None of the above.

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Definitions:

Unethical Behavior

Actions that violate moral or professional standards of conduct, often prioritizing personal gain over ethical principles.

Ethical Behavior

Acting in ways consistent with societal standards of what is right and just, often guided by moral principles.

Organizational Stories

Narratives shared within an organization that convey values, norms, and practices, often shaping the culture and identity of the organization.

Cynicism

An attitude characterized by skepticism towards motives or virtues of others, often accompanied by a general distrust of societal norms and values.