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disa [49]
3 years ago
7

During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On

the date of distribution, the land has a basis of $250,000, a fair market value of $650,000, and is subject to a liability of $500,000. Kena, who takes the land subject to the liability, has a basis of $120,000 in the Ecru stock. With respect to the distribution of the land, which of the following statements is correct?
a. Kena recognizes a gain of $530,000.
b. Ecru Corporation recognizes a gain of $250,000.
c. Kena recognizes a gain of $30,000.
d. Kena has a basis of $250,000 in the land.
Business
1 answer:
uysha [10]3 years ago
3 0
1)correct option is "C" -Kena recognizes a gain of $30,000 Value in basis of land = 650000-5000
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