When a shareholder receives property subject to a liability pursuant to a complete liquidation (not a parent-subsidiary liquidation), the fair market value of the property is reduced by the amount of the liability in computing the shareholder's gain (or loss) on the liquidation.

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This statement is true as per the Internal Revenue Code Section 334(b)(1), which states that "The amount realized by a shareholder on the disposition of a share in a distribution in complete liquidation of a corporation shall be the fair market value of the property received by him, reduced by the amount of any liability of the corporation assumed by the shareholder in the distribution."

When a Shareholder Receives Property Subject to a Liability Pursuant