Brooks Corporation distributes property with a basis of $20,000 and a fair market value of $25,000 to Caroline in complete liquidation of the corporation.Caroline's basis in the stock is $32,000.What must Caroline and Brooks report as income (loss)upon the liquidation of Brooks?

Caroline Brooks
A)$(12,000)$(7,000)
B)$(12,000)$5,000
C)$(12,000)$-0-
D)$(7,000)$5,000

Question

Brooks Corporation distributes property with a basis of $20,000 and a fair market value of $25,000 to Caroline in complete liquidation of the corporation.Caroline's basis in the stock is $32,000.What must Caroline and Brooks report as income (loss)upon the liquidation of Brooks?
​
Caroline Brooks
A)$(12,000)$(7,000)
B)$(12,000)$5,000
C)$(12,000)$-0-
D)$(7,000)$5,000

Quizplus · Accepted Answer

The Answer of Brooks Corporation distributes property with a basis of $20,000 and a fair market value of $25,000 to Caroline in complete liquidation of the corporation.Caroline's basis in the stock is $32,000.What must Caroline and Brooks report as income (loss)upon the liquidation of Brooks?
​
Caroline Brooks
A)$(12,000)$(7,000)
B)$(12,000)$5,000
C)$(12,000)$-0-
D)$(7,000)$5,000

Brooks Corporation Distributes Property with a Basis of $20,000 and a Fair