The Stock of Loon Corporation Is Held as Follows: 85

question 26

Multiple Choice

The stock of Loon Corporation is held as follows: 85% by Duck Corporation and 15% by Gerald, an individual. Loon Corporation is liquidated in December of the current year, pursuant to a plan adopted earlier in the year. Loon 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 Loon stock. How much gain will Loon Corporation recognize in this liquidating distribution?

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

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Definitions:

Social-Cognitive Perspective

A theoretical framework emphasizing the role of cognitive processes in understanding social behavior and how people process, store, and apply information about others and situations.

Conditioning

A method of altering behavior in which an individual learns to react appropriately to a formerly neutral trigger, now paired numerous times with a naturally occurring stimulus that provokes the intended response.

Imitating

The act of copying or mimicking the behaviors, actions, or characteristics of another individual.

Personality

The set of qualities that carve out an individual's unique identity.