Pursuant to a complete liquidation, Woodpecker Corporation distributes the following assets to its unrelated shareholders: land held for six years as an investment (basis of $100,000, fair market value of $300,000), inventory (basis of $100,000, fair market value of $140,000), and marketable securities held for two years as an investment (basis of $200,000, fair market value of $120,000). What are the tax results to Woodpecker Corporation as a result of the liquidation?
A) Woodpecker Corporation would recognize ordinary income of $40,000 and a net capital gain of $200,000.
B) Woodpecker Corporation would recognize ordinary income of $40,000 and a net capital gain of $120,000.
C) Woodpecker Corporation would recognize ordinary income of $40,000 and a net capital loss of $80,000.
D) Woodpecker Corporation would recognize no gain or loss on the liquidation.
E) None of the above.

Question

Quizplus · Accepted Answer

The Answer of Pursuant to a complete liquidation, Woodpecker Corporation distributes the following assets to its unrelated shareholders: land held for six years as an investment (basis of $100,000, fair market value of $300,000), inventory (basis of $100,000, fair market value of $140,000), and marketable securities held for two years as an investment (basis of $200,000, fair market value of $120,000). What are the tax results to Woodpecker Corporation as a result of the liquidation?
A) Woodpecker Corporation would recognize ordinary income of $40,000 and a net capital gain of $200,000.
B) Woodpecker Corporation would recognize ordinary income of $40,000 and a net capital gain of $120,000.
C) Woodpecker Corporation would recognize ordinary income of $40,000 and a net capital loss of $80,000.
D) Woodpecker Corporation would recognize no gain or loss on the liquidation.
E) None of the above.

Pursuant to a Complete Liquidation, Woodpecker Corporation Distributes the Following