These are the same facts as the previous question. Riverwalk Corporation, a C Co

Question

These are the same facts as the previous question.

Riverwalk Corporation, a C Corp, distributes all of its property in a complete liquidation. Juan receives equipment having a $43,000 FMV, $35,000 adjusted basis to Riverwalk (original cost to Riverwalk of $55,000, with $20,000 MACRS depreciation taken) in exchange for all of his shares (basis $25,000, held for 5 years).

What is amount and character of income recognized by Juan as a result of this distribution?

$30,000 ordinary income.

$18,000 LTCG.

$18,000 1231 gain.

$18,000 ordinary income.

A.

$30,000 ordinary income.

B.

$18,000 LTCG.

C.

$18,000 1231 gain.

D.

$18,000 ordinary income.

Explanation / Answer

If any doubt please comment

The gain is the difference between FMV-Basis in stock $43000-25000 $18,000 Option B $18000 LTCG

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