Which of the following statements best describes the recognition of loss on property transferred to shareholders in complete liquidation of a corporation?
A)The liquidated corporation always recognizes loss on the distribution of property in complete liquidation of the corporation.
B)The liquidated corporation never recognizes loss on the distribution of property in complete liquidation of the corporation.
C)The liquidated corporation recognizes loss on the distribution of property in complete liquidation of the corporation if the property is distributed to individuals who are not related parties to the corporation.
D)The liquidated corporation recognizes loss on the distribution of property in complete liquidation of the corporation only if the property is distributed to individuals who are related parties to the corporation.

Question

Quizplus · Accepted Answer

The liquidated corporation recognizes loss on the distribution of property in complete liquidation of the corporation if the property is distributed to individuals who are not related parties to the corporation. This is because if the property is distributed to related parties, the loss is disallowed due to related party rules. However, if the property is distributed to unrelated parties, the loss can be recognized by the liquidated corporation.

Which of the Following Statements Best Describes the Recognition of Loss