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17 May, 22:51

Pursuant to a complete liquidation, Carrot Corporation distributes to its shareholders real estate held as an investment (basis of $650,000, fair market value of $880,000). a. Determine the gain or Raabe, William A ... South-Western Federal Taxation 2020: Corporations, Partnerships, Estates and Trusts (p. 6-31). Cengage Learning. Kindle Edition.

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  1. 17 May, 23:13
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    Carrot's gain = $230,000

    Explanation:

    given data

    basis = $650,000

    fair market value = $880,000

    solution

    we know that Carrot corporation recognize that both gains and losses on liquidation distribution as if its sold at the fair market value

    so here Carrot's gain is express as

    Carrot's gain = fair market value - basis ... 1

    put here value we get

    Carrot's gain = $880,000 - $650,000

    Carrot's gain = $230,000
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