Zeus owns 100% of Grecian Image Corporation and his basis in the stock is $105,000.He receives cash of $20,000 and property with FMV of $100,000 and basis of $140,000 in complete liquidation of his ownership interest.What amount of gain or loss should Zeus recognize as a result of this transaction?

Question

Quizplus · Accepted Answer

In a complete liquidation, Zeus would recognize gain or loss based on the difference between the fair market value (FMV) of the assets received and his basis in the stock. Here, Zeus receives assets with a total FMV of $120,000 ($20,000 cash + $100,000 property) against his basis of $105,000 in the stock. Thus, Zeus would recognize a gain of $15,000 ($120,000 - $105,000). The basis of the property received and the FMV of the stock are not directly relevant for calculating the recognized gain in this scenario.

Zeus Owns 100% of Grecian Image Corporation and His Basis