The stock of Mulberry Corporation is owned by Archana (60%) and Anar (40%), who

Question

The stock of Mulberry Corporation is owned by Archana (60%) and Anar (40%), who are mother and daughter. Pursuant to a plan of complete liquidation adopted earlier in the current year, Mulberry distributes land worth $575,000 to Anar (Basis of $100,000 in Mulberry stock). The land was purchased by Mulberry Corporation three years ago for $650,000, and it is distributed subject to a liabilit of $435,000.

What amount of gain or loss is recognized by Mulberry Corporation and by Anar with respect to the distribution of the land?

Explanation / Answer

gain to anar 575000-435000=$140000 anar has to get 435000 instead he received land worth $575000 from mulbary corporation

loss to mulbary=650000-575000=$(75000)

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