Cowboy Corporation owns 90% of the single class of stock in Doggie Corporation.The other 10% is owned by Miguel,an individual.Cowboy's basis in its Doggie Corporation stock is $100,000 and Miguel's basis is $50,000.Doggie Corporation distributes property having an adjusted basis of $150,000 and an FMV of $500,000 to Cowboy Corporation,and $60,000 of money to Miguel as a liquidating distribution.Doggie and Cowboy Corporations must recognize gain of:

Question

Quizplus · Accepted Answer

A)The 90% stock ownership by Cowboy meets the Sec.332 minimum stock ownership rules.Therefore,no gain or loss is recognized by the subsidiary corporation or the parent corporation.

Cowboy Corporation Owns 90% of the Single Class of Stock