A Corporation owns 90 percent of the outstanding stock of B Corporation; the remaining 10 percent is owned by unrelated parties.In a liquidation pursuant to § 332, B distributed and transferred property to A with a fair market value of $80,000 (basis $30,000).In addition, B distributed and transferred property to the minority shareholders worth $11,000 (basis $9,000).How much gain does B realize?

Question

Quizplus · Accepted Answer

Since the distribution was made pursuant to § 332, B will not recognize any gain or loss on the transfer of assets to A. The gain will only be recognized by A when it disposes of the assets received from B. Therefore, the gain realized by B is $2,000 ($11,000 minus $9,000).

A Corporation Owns 90 Percent of the Outstanding Stock of B