Copper Corporation (E & P of $1

question 115

Multiple Choice

Copper Corporation (E & P of $1.2 million) distributes land (basis of $410,000, fair market value of $650,000) to Lauren, a shareholder, to carry out a qualifying stock redemption. Lauren had a basis of $90,000 in the shares redeemed. Which of the following is an incorrect statement regarding the redemption?

• A) If the land is distributed subject to a $500,000 liability, Copper Corporation will recognize a gain of $240,000.
• B) If the land is distributed subject to a $500,000 liability, Lauren will have a basis in the land of $650,000.
• C) If the land is distributed subject to a $500,000 liability, Lauren will recognize a gain of $60,000.
• D) If the land is distributed subject to a $700,000 liability, Copper Corporation will recognize a gain of $290,000.
• E) None of the above.

---

Definitions:

Employment

Employment involves having a job or role in a company or organization, earning wages or a salary in exchange for work.

Imperfectly Competitive

Refers to market structures that do not meet the conditions of perfect competition, including monopolistic competition, oligopoly, and monopoly.

Marginal Products

This term refers to the extra output gained by adding one more unit of a specific input, keeping other inputs constant, in the production process.

Product Market

The marketplace where final goods or services are offered for purchase by consumers, businesses, and the public sector.