Dexer Corporation is owned 70% by Amy and 30% by Brad. Dexer Corporation owns Eagle Corporation stock with a $50,000 adjusted basis and a $30,000 FMV. The stock is not disqualified property. As part of a complete liquidation, the Eagle Corporation stock is distributed to Amy. Amy's basis in her Dexer stock is $40,000. Dexer Corporation will recognize
A)no loss.
B)a $10,000 loss.
C)a $20,000 loss.
D)none of the above

Question

Quizplus · Accepted Answer

In a complete liquidation, a corporation recognizes no loss when distributing property to its shareholders. The distribution of property with a fair market value (FMV) less than its adjusted basis does not trigger a loss recognition for the corporation.

Dexer Corporation Is Owned 70% by Amy and 30% by Brad