During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On the date of distribution, the land has a basis of $300,000, a fair market value of $650,000, and is subject to a liability of $400,000. Kena, who takes the land subject to the liability, has a basis of $75,000 in the Ecru stock. With respect to the distribution of the land, which of the following statements is correct?
A) Ecru Corporation recognizes a gain of $100,000.
B) Kena has a basis of $250,000 in the land.
C) Kena recognizes a gain of $175,000.
D) Kena has a basis of $300,000 in the land.
E) Kena recognizes a gain of $575,000.

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The Answer of During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On the date of distribution, the land has a basis of $300,000, a fair market value of $650,000, and is subject to a liability of $400,000. Kena, who takes the land subject to the liability, has a basis of $75,000 in the Ecru stock. With respect to the distribution of the land, which of the following statements is correct?
A) Ecru Corporation recognizes a gain of $100,000.
B) Kena has a basis of $250,000 in the land.
C) Kena recognizes a gain of $175,000.
D) Kena has a basis of $300,000 in the land.
E) Kena recognizes a gain of $575,000.

During the Current Year, Ecru Corporation Is Liquidated and Distributes