In the Current Year, Dove Corporation (E & P of $1

question 12

Multiple Choice

In the current year, Dove Corporation (E & P of $1 million) distributes all of its property in a complete liquidation. Alexandra, a shareholder, receives land having a fair market value of $200,000. Dove Corporation had purchased the land as an investment three years ago for $125,000, and the land was distributed subject to a $100,000 liability. Alexandra took the land subject to the $100,000 liability. What is Alexandra's basis in the land?

• A) $0
• B) $100,000
• C) $125,000
• D) $200,000
• E) None of the above

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Definitions:

Fair Value

The estimated market value of an asset or liability based on current market prices or valuations.

Fiscal Year

A one-year period used for accounting purposes and preparing financial statements, not necessarily aligning with the calendar year.

Equity Method

An accounting technique used to record the investments in other entities where the investor has significant influence but not full control.

Outstanding Stock

The number of shares of a corporation that have been issued and are currently owned by shareholders.