During the Current Year, Ecru Corporation Is Liquidated and Distributes

question 36

Multiple Choice

During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On the date of distribution, the land has a basis of $370,000, a fair market value of $550,000, and is subject to a liability of $450,000. Kena, who takes the land subject to the liability, has a basis of $50,000 in the Ecru stock. With respect to the distribution of the land, which of the following statements is correct?

• A)Kena recognizes a gain of $50,000.
• B)Ecru Corporation recognizes a gain of $80,000.
• C)Kena has a basis of $100,000 in the land.
• D)Kena has a basis of $370,000 in the land.
• E)None of the above.

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Definitions:

Factorial ANOVA

A statistical analysis technique used to identify the effect of two or more independent variables on a dependent variable and their interaction effects simultaneously.

Independent Variable

The variable in an experiment or study that is manipulated or changed by the researcher to observe its effect on the dependent variable.

More Than One

Indicates a quantity that exceeds a single unit or instance.