Indigo,the parent corporation,has a basis of $550,000 in the stock of Brown Corporation,a subsidiary in which it owns 90% of all classes of stock.Indigo purchased the stock in Brown Corporation 10 years ago.In the current year,Indigo Corporation liquidates Brown Corporation and acquires assets worth $800,000 and with a tax basis to Brown Corporation of $625,000.What basis will Indigo Corporation have in the assets acquired from Brown Corporation?

Question

Quizplus · Accepted Answer

Property received by a parent corporation in a complete liquidation of its subsidiary under § 332 has the same basis it had in the hands of the subsidiary,or $625,000.The parent's basis in the stock of the liquidated subsidiary disappears.

Indigo,the Parent Corporation,has a Basis of $550,000 in the Stock