Three years ago,Loon Corporation purchased 100% of the stock of Pelican Corporation for $720,000.Pelican Corporation has a basis of $500,000 in its assets,but the assets currently have a fair market value of $800,000.If Loon liquidates Pelican,what basis will Loon have in the assets it acquires from Pelican Corporation?

Question

Quizplus · Accepted Answer

Property received by a parent corporation in a complete liquidation of its subsidiary under § 332 has the same basis the property had in the hands of the subsidiary,or $500,000.The parent's basis in the stock of the liquidated subsidiary disappears.

Three Years Ago,Loon Corporation Purchased 100% of the Stock of Pelican