Warsham Inc. sold land with a $300,000 basis to Sara Phillips for $117,000 cash. Sara owns 68 percent of Warsham's outstanding stock. Which of the following statements is true?
A) Warsham cannot recognize its $183,000 realized loss on sale on its current year tax return.
B) Warsham does not report the $183,000 realized loss on its current year financial statements.
C) The $183,000 loss is an unfavorable temporary difference between Warsham's book and tax income.
D) Both a. and c. are true.
Correct Answer:
Verified
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