The Stock in Black Corporation Is Owned Entirely by Nancy

question 84

Multiple Choice

The stock in Black Corporation is owned entirely by Nancy (80%) and Wanda (20%) , mother and daughter. Three years ago, Nancy contributed land (basis of $200,000, fair market value of $250,000) to Black Corporation in a transaction that qualified under § 351. In the current year and pursuant to a complete liquidation of Black, the land is distributed proportionately to Nancy and Wanda. At the time of the liquidating distribution, the land had a fair market value of $100,000. What amount of loss will Black Corporation recognize on the distribution of the land?

• A) $20,000.
• B) $80,000.
• C) $100,000.
• D) $150,000.
• E) None of the above.

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Definitions:

Short Run

A period in which at least one factor of production is fixed and cannot be changed.

Purely Competitive Industry

A market structure characterized by many small firms producing identical products, with no single firm able to influence market prices.

Long Run

A period of time in economics where all factors of production and costs can be varied, allowing for the adjustment of all inputs.