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1 Feb 2019

During the year, Blue Corporation distributes land to its soleshareholder. If the fair market value of the land is less than itsadjusted basis, Blue will not be able to recognize a loss on thedistribution. a. True b. False

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Bunny Greenfelder
Bunny GreenfelderLv2
3 Feb 2019

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True or False questions

Nancy is a 30% partner in the ABC Partnership with an outsidebasis of $20,000. ABC distributes land with a basis of $12,000 andfair value of $18,000 to Cathy in complete liquidation of herinterest. Cathy recognizes a capital loss of $8,000 on thedistribution

In a disproportionate liquidating distribution of cash,inventory and capital gain property, a partner will alwaysrecognize gain

ABC Corporation distributes land with a fair market value of$200,000 to its sole shareholder. ABC's tax basis in the land is$50,000. Assuming sufficient earnings and profits, the amount ofdividend reported by the shareholder is $200,000

John owns 30 percent of ABC Corporation. ABC Corporation owns 50percent of ABCD Corporation. Under the attribution rules applyingto stock redemptions, John is treated as owning 15 percent of ABCDCorporation.

Mary and Jane, unrelated taxpayers, hold Gray Corporation’sstock equally. One year before the complete liquidation of Gray,Mary transfers land (basis of $600,000, fair market value of$180,000) to Gray Corporation as a contribution to capital. Inliquidation, Gray distributes the land to Jane. At the time of theliquidation, the land is worth $150,000.

a.

How much loss may Gray Corporation recognize on the distributionof the land to Jane?

b.

Assume that the transfer of land to Gray Corporation was made sothat the corporation could subdivide the land and build residentialhousing. However, a subsequent deterioration of the housing marketforced Gray Corporation to abandon its plans. What amount of lossmay Gray Corporation recognize on the distribution of the land toJane?

When Teri’s outside basis in the TMF Partnership is $80,000, thepartnership distributes to her $30,000 of cash, an accountreceivable (fair market value

of $60,000, inside basis to the partnership of $0), and a parcelof land (fair market

value of $60,000, inside basis to the partnership of $80,000).Teri remains a partner in the partnership, and the distribution isproportionate to the partners.

a. Determine the recognized gainor loss to the partnership as a result of this distribution.

b. Determine the recognized gain or lossto Teri as a result of the distribution.

c. Determine Teri’s basis in theland, account receivable, and TMF Partnership after thedistribution.

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