Purple Corporation Has Two Equal Shareholders,Joshua and Ellie,who Are Father

question 28

Multiple Choice

Purple Corporation has two equal shareholders,Joshua and Ellie,who are father and daughter.One year ago,the two shareholders transferred properties to Purple in a § 351 exchange.Joshua transferred undeveloped land (basis of $230,000,fair market value of $160,000) and securities (basis of $10,000,fair market value of $90,000) ,while Ellie transferred equipment (basis of $175,000,fair market value of $250,000) .In the current year,Purple Corporation adopts a plan of liquidation,sells all of its assets,and distributes the proceeds pro rata to Joshua and Ellie.The only loss realized upon disposition of the properties was with respect to the undeveloped land that had decreased in value to $120,000 and was sold for this amount.Purple never used the land for any business purpose during the time it was owned by the corporation.What amount of loss can Purple Corporation recognize on the sale of the undeveloped land?

• A)$0.
• B)$40,000.
• C)$70,000.
• D)$120,000.
• E)None of the above.

---

Definitions:

Languages Exist

The phenomenon that spoken or sign languages are developed and used by human communities as a medium for communication and cultural expression.

Conflict Theory

A theoretical framework in sociology that emphasizes the role of societal conflicts, power, and inequality in shaping social relations.

Ascriptive

Referring to the assignment of social status, roles, or characteristics at birth, based on factors such as race, gender, or family heritage, rather than personal achievement.

Continental Divide

A geographical boundary or ridge in a continent that separates river systems flowing toward opposite sides of the continent.