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.

---

Definitions:

Mental Abilities

The cognitive functions and capacities of the brain, including reasoning, memory, problem-solving, and intelligence.

Aptitude

A natural ability or talent in a particular area, which can influence an individual's learning and performance in specific tasks.

Educational Psychologists

Professionals who study how people learn and retain knowledge, often focusing on developing educational materials and practices.

Mental Abilities

The cognitive functions and processes related to understanding, reasoning, problem-solving, and decision-making.