The Stock of Penguin Corporation Is Held as Follows: 85

question 6

Multiple Choice

The stock of Penguin Corporation is held as follows: 85% by Duck Corporation and 15% by Gerald, an individual. Penguin Corporation is liquidated in December of the current year, pursuant to a plan adopted earlier in the year. Penguin Corporation distributes land with a basis of $350,000 and fair market value of $390,000 to Gerald in liquidation of his stock interest. Gerald had a basis of $200,000 in his Penguin stock. How much gain will Penguin Corporation recognize in this liquidating distribution?

• A)$0.
• B)$40,000.
• C)$190,000.
• D)$390,000.
• E)None of the above.

---

Definitions:

(E)-2-pentene

An alkene with the formula CH3CH=CHCH2CH3 where the two substituents on the double bond are on opposite sides, denoted by the (E) configuration.

(Z)-2-pentene

An alkene with the chemical formula C5H10, where the double bond between carbons 2 and 3 has the highest priority substituents on the same side, following the Cahn-Ingold-Prelog priority rules.

Stereoisomers

Compounds sharing identical molecular formulas and sequences of bonded atoms, yet varying in the spatial arrangement of their atoms.

Mirror Image

Refers to the non-superimposable reflection of a molecule or object, analogous to its appearance in a mirror, often used in stereochemistry to describe chiral compounds.