Ask Question
17 November, 09:45

Calamity Corp. distributes five unimproved parcels of swampland to its shareholders as part of a complete liquidation. The fair market value of each parcel is $25,000 and Calamity's adjusted basis in each parcel is $40,000. What amount of gain or loss will Calamity Corp. recognize as a result of distributing the parcels?

+1
Answers (1)
  1. 17 November, 10:00
    0
    -$75,000

    Explanation:

    We simply substract the adjusted basis value from the market value

    Adjusted value = $40,000 x 5

    = $200,000

    Fair Maket Value = $25,000 x 5

    = $125,000

    Calamity Corp. gain/loss = $125,000 - $200,000

    = - $75,000

    Therefore, Calamity Corp will recognize a loss of $75,000 as a result of distributing the parcels.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Calamity Corp. distributes five unimproved parcels of swampland to its shareholders as part of a complete liquidation. The fair market ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers