The Stock of Cardinal Corporation Is Held as Follows: 90

question 40

Multiple Choice

The stock of Cardinal Corporation is held as follows: 90% by Blue Jay Corporation (basis of $500,000) and 10% by Samuel (basis of $70,000) .Cardinal Corporation is liquidated on October 20,2010,pursuant to a plan adopted on January 8,2010.Pursuant to the liquidation,Cardinal Corporation distributed Asset A (basis of $450,000,fair market value of $720,000) to Blue Jay,and Asset B (basis of $45,000,fair market value of $80,000) to Samuel.No election is made under § 338.With respect to the liquidation of Cardinal:

• A)Samuel recognizes no gain (or loss).
• B)Blue Jay has a basis in Asset A of $720,000.
• C)Cardinal Corporation recognizes a gain of $35,000.
• D)Blue Jay recognizes a gain of $220,000.
• E)None of the above.

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Definitions:

Parental Species

The original species from which new species originate, often investigated in the context of evolutionary biology.

Alloploidy

A type of polyploidy where the chromosome sets come from different species, leading to the creation of hybrid organisms.

Slow Speciation

The gradual process by which new species are formed over long periods of time, often involving gradual adaptations to environmental changes.

Allopolyploids

Organisms that contain multiple sets of chromosomes derived from different species, typically as a result of hybridization followed by chromosome doubling.