During the year, Blue Corporation distributes land to its sole shareholder. If the fair market value of the land is less than its adjusted basis, Blue will not be able to recognize a loss on the distribution.

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In general, corporations cannot recognize a loss on distributions of property (including land) to their shareholders. Losses on such distributions are disallowed under the U.S. Internal Revenue Code.

During the Year, Blue Corporation Distributes Land to Its Sole