Exercise 6-33 (Algorithmic) (LO. 4)

On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are:

	Shareholder's Basis	Fair Market Value	Built in Gain or (Loss)
Property 1	$553,200	$663,840	$110,640
Property 2	$940,440	$719,160	($221,280)
Net built-in loss			($110,640)

Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 40% shareholder when the property is worth $608,520.

a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022. Martin's basis is Property 1 is a

stepped-downstepped-upcarryoverstepped-down

basis of $____________ Martin's basis in Property 2 is a

stepped-downstepped-upcarryoverstepped-down

basis of $______________

b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $_______________and a recognized loss of $_____________