Finch Corporation distributes property (basis of $225,000, fair market value of $300,000) to a shareholder in a distribution that is a qualifying stock redemption. The property is subject to a liability of $160,000, which the shareholder assumes. The basis of the property to the shareholder is:
A) $-0-.
B) $140,000.
C) $225,000.
D) $300,000.
E) None of these.

Question

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The Answer of Finch Corporation distributes property (basis of $225,000, fair market value of $300,000) to a shareholder in a distribution that is a qualifying stock redemption. The property is subject to a liability of $160,000, which the shareholder assumes. The basis of the property to the shareholder is:
A) $-0-.
B) $140,000.
C) $225,000.
D) $300,000.
E) None of these.

Finch Corporation Distributes Property (Basis of $225,000, Fair Market Value