Magenta Corporation acquired land in a § 351 exchange in 2007.The land had a basis of $450,000 and a fair market value of $520,000 on the date of the transfer.Magenta Corporation has two equal shareholders,Mark and Megan,who are father and daughter.Magenta Corporation adopts a plan of liquidation in the current year.On this date,the land has decreased in value to $390,000.Magenta Corporation sells the land for $390,000 and distributes the proceeds pro rata to Mark and Megan.What amount of loss may Magenta Corporation recognize on the sale of the land?

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The related-party loss limitation does not apply to sales.The property does not have a built-in loss on the date of the transfer to the corporation; thus,the built-in loss limitation does not apply.The basis of the property to Magenta Corporation is $450,000 and,upon a sale of the property for $390,000,Magenta Corporation would recognize the $60,000 loss.

Magenta Corporation Acquired Land in a § 351 Exchange in 2007.The