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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