Parent Corporation owns 100 of Subsidiary Corporations stock The adjusted basis of its stock investment is $175,000 A plan of liquidation is adopted, and Subsidiary distributes to Parent assets having a $400,000 FMV and a $300,000 adjusted basis (to Subsidiary), and liabilities in the amount of $60...

a 100000 realized gain 400000 300000 but no recognized gain Sec 337 ...

Parent Corporation owns 100% of Subsidiary Corporations stock. The adjusted basis of its stock investment is $175,000.

Question:

Parent owns 100% of Subsidiary Corporation’s stock. The adjusted basis of its stock investment is $175,000. A plan of is adopted, and Subsidiary distributes to Parent assets having a $400,000 FMV and a $300,000 adjusted basis (to Subsidiary), and liabilities in the amount of $60,000. Subsidiary has a $150,000 E&P balance.
a. What are the amount and character of Subsidiary’s recognized gain or loss on the distribution?
b. What are the amount and character of Parent’s recognized gain or loss on the surrender of the Subsidiary stock?
c. What basis does Parent take in the assets?
d. What happens to Parent’s basis in the Subsidiary stock and to Subsidiary’s tax attributes?
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... 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....