Answer:
<em>The Long-term capital gain (Jake recognize) = $80,000
</em>
<em>
However, the Jake considered the basis of $390,000 (Land).</em>
Explanation:
<em>From the questions given we find the following,</em>
<em>What are the consequences of tax for the distribution liquidating to Jake and Scarlet Corporation </em>
<em>Then,</em>
<em>The Long-term capital loss (Scarlet Corporation recognize) = Fair market value - Basis
</em>
<em>
The Long-term capital loss (Scarlet Corporation recognize) = $390,000 - $425,000
</em>
<em>
The Long-term capital loss (Scarlet Corporation recognize) = $35,000
</em>
<em>
The Long-term capital gain (Jake recognize) = (Fair market value of land - Liability) - Basis of stock
</em>
<em>
The Long-term capital gain (Jake recognize) = ($390,000 - $250,000) - $60,000
</em>
<em>
The Long-term capital gain (Jake recognize) = $80,000
</em>
<em>
However, the Jake considered the basis of $390,000 (Land).</em>
