Billie transferred her 20 percent interest to Jean Company as part of a complete liquidation of the company.In the exchange she received land with a fair market value of $200,000.Billie's basis in the Jean stock was $100,000.The land had a basis to Jean Company of $400,000.What amount of loss does Jean recognize in the exchange and what is Billie's basis in the land she receives? Billie is not considered a related party to Jean Company.
A)$200,000 loss recognized by Jean and a basis to Billie in the land of $200,000.
B)$200,000 loss recognized by Jean and a basis to Billie in the land of $400,000.
C)No loss recognized by Jean and a basis to Billie in the land of $200,000.
D)No loss recognized by Jean and a basis to Billie in the land of $400,000.

Question

Quizplus · Accepted Answer

Jean recognizes a $200,000 loss on the exchange because the fair market value of the land it received ($200,000) is less than its basis in the land ($400,000). Billie's basis in the land she receives is $200,000, which is the fair market value of the land.

Billie Transferred Her 20 Percent Interest to Jean Company as Part