Question 26 The stock of Kenny Corp. is owned equally by two brothers. During 20

Question

Question 26 The stock of Kenny Corp. is owned equally by two brothers. During 2008, they transferred land (which had a basis of $300,000 and a fair market value of $320,000) as a contribution to capital to Kenny Corp. During September, 2014, Kenny Corp. adopted a plan of complete liquidation and in December 2014 made a pro rata distribution of land back to the brothers. At the time of the liquidating distribution, the land had a fair market value of $180,000. What amount of loss can be recognized by Kenny Corp. on the distribution of land?

A. $0.

B. $20,000.

C. $120,000.

D. $140,000.

Explanation / Answer

Ans: Option C: $ 120000

Solu:Basis in Land for corporation= $ 300000

FMV on Liquidation= $ 180000

Loss = 300000-180000= $120000

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