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
A)0)
B)$2,000.
C)$3,000.
D)$11,000.

Question

Quizplus · Accepted Answer

The total amount of money and property received by Juan is $11,000 ($5,000 in cash + $6,000 FMV of other property). This amount is less than Juan's basis in his Riverwalk stock, so he must recognize a loss of $3,000 ($8,000 basis - $11,000 received). Since the loss is recognized, there is no gain to recognize. Therefore, the answer is C.

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