Three sisters,Carol,Lori,and Nina,own the stock in White Corporation equally.The three sisters owned,as tenants in common,a tract of land (basis of $350,000,fair market value of $460,000)that they transferred to White Corporation four years ago as a contribution to capital.In the current year,White Corporation adopts a plan of liquidation and distributes the land,now worth $300,000,equally to Carol,Lori,and Nina as tenants in common.What amount of loss may White Corporation recognize on the distribution of the land?

Question

Quizplus · Accepted Answer

Each sister owns directly and indirectly 100% of the White Corporation stock under § 267.Since White acquired the land within the five-year period preceding the distribution as a contribution to capital,the land is disqualified property.Thus,the related-party loss limitation applies to disallow the entire loss.

Three Sisters,Carol,Lori,and Nina,own the Stock in White Corporation Equally