At the time of its liquidation under 332, Pink Corporation (earnings and profits of $560,000) had

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At the time of its liquidation under § 332, Pink Corporation (earnings and profits of $560,000) had the following assets and liabilities: 

cash ($175,000); marketable securities (fair market value of $230,000, basis of $250,000); unimproved land (fair market value of $600,000, basis of $300,000); unsecured note payable ($50,000); and mortgage on the unimproved land ($270,000). Pink Corporation also had a net operating loss carryover of $45,000. Wren Corporation acquired all of the stock of Pink Corporation seven years ago for $160,000.

1) How much gain (or loss) will Pink Corporation recognize upon the liquidating distribution of its assets and liabilities to Wren Corporation?

2) How much gain (or loss) will Wren Corporation recognize in the liquidation of Pink?

3) What basis will Wren have in the marketable securities and unimproved land it receives in the liquidation?

4) What happen to Pink's earnings and profits and net operating loss carryover?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....
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