Baretta Corp. owns 100 percent of the stock of PPK Corp., and also owns PPK Corp. debentures

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Baretta Corp. owns 100 percent of the stock of PPK Corp., and also owns PPK Corp.

debentures with a face amount (and basis) of

$200,000. A plan ofli quidation is adopted and PPK is liquidated under Code Sec. 332.

Pursuant to the liquidation, PPK distributes inventory with a FMV of

$200,000 and a basis of $220,000 in cancellation of the debentures.

a. How much loss can be recognized by PPK Corp. on the distribution oft he inventory to Baretta?

b. What is Baretta Corp.'s tax basis for the inventory received from PPK?

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CCH Federal Taxation Basic Principles 2020

ISBN: 9780808051787

2020 Edition

Authors: Ephraim P. Smith, Philip J. Harmelink, James R. Hasselback

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Question Posted: Feb 27, 2024 03:06 AM

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Baretta Corp. owns 100 percent of the stock of PPK Corp., and also owns PPK Corp. debentures

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CCH Federal Taxation Basic Principles 2020

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