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27 July, 11:12

Rosalie owns 50% of the outstanding stock of Salmon Corporation. In a qualifying stock redemption, Salmon distributes $80,000 to Rosalie in exchange for one-half of her shares, which have a basis of $100,000.

Compute Rosalie's recognized loss, if any, on the redemption.

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  1. 27 July, 11:35
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    Rosalie's recognized loss is $20,000.

    Explanation:

    Calculate the person R's recognized loss:

    Person R's recognized loss = Amount distributed - Basis of share

    = $80,000-$100,000

    = $20,000

    Therefore, person R's recognized loss is $20,000.

    Person R's recognized loss is $20,000.
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