Riverwalk Corporation is liquidated, with Juan receiving $5,000 in money and other property having a $6,000 FMV. Juan's basis in his Riverwalk stock is $8,000. Upon liquidation, Juan must recognize a gain of

Question

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To calculate the gain or loss realized on liquidation of a corporation, the total value of money and property received is subtracted from the shareholder's basis in the stock. In this case, Juan received $5,000 in money and $6,000 in other property, for a total value of $11,000. His basis in the stock was $8,000. Therefore, his realized gain is $11,000 - $8,000 = $3,000. Juan must recognize this gain on his tax return.

Riverwalk Corporation Is Liquidated, with Juan Receiving $5,000 in Money