Purple Corporation Has Two Equal Shareholders, Joshua and Ellie, Who

question 33

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 land (basis of $600,000, fair market value of $450,000) and securities (basis of $70,000, fair market value of $250,000) , while Ellie transferred equipment (basis of $420,000, fair market value of $700,000) . 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 land that had decreased in value to $310,000 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 land?

• A) $0
• B) $140,000
• C) $150,000
• D) $290,000
• E) None of the above

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Definitions:

Population Growth

An increase in the number of people that reside in a country or region over a specific period of time.

Infrastructure

The fundamental facilities and systems serving a country, city, or area, including transportation and communication systems, water and power lines, and public institutions like schools and hospitals.

Cellular Phones

Mobile phones that operate over a cellular network, allowing for voice and data communication without a physical wired connection.

Economic Development

The process by which a nation improves the economic, political, and social well-being of its people, often through industrial growth and infrastructure improvement.