Pursuant to a complete liquidation, Oriole Corporation distributes to its shareholders land with a basis of $450,000 and a fair market value of $550,000. The land is subject to a liability of $600,000. What is Oriole's recognized gain or loss on the distribution?
A) $0.
B) $100,000 gain.
C) $150,000 gain.
D) $50,000 loss.
E) None of the above.

Question

Quizplus · Accepted Answer

Oriole Corporation recognizes a gain of $150,000, calculated as the liability ($600,000) minus the basis of the land ($450,000). The fair market value is not relevant since the liability exceeds it.

Pursuant to a Complete Liquidation, Oriole Corporation Distributes to Its