2 14. Pursuant to a complete liquidation, Richards Corporation distributes the following to a shareholder: Inventory,...

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2 14. Pursuant to a complete liquidation, Richards Corporation distributes the following to a shareholder: Inventory, basis $10,000, FMV $20,000; and land held as an investment, basis $5,000, FMV $40,000. The land is subject to a $30,000 liability. What are the amounts and character of income to be recognized by Richards Corporation? $10,000 ordinary income; $35,000 capital gain • $10,000 ordinary income; $65,000 capital gain • $0 ordinary income; $0 capital gain • $10,000 ordinary income; $5,000 capital gain . 2 14. Pursuant to a complete liquidation, Richards Corporation distributes the following to a shareholder: Inventory, basis $10,000, FMV $20,000; and land held as an investment, basis $5,000, FMV $40,000. The land is subject to a $30,000 liability. What are the amounts and character of income to be recognized by Richards Corporation? $10,000 ordinary income; $35,000 capital gain • $10,000 ordinary income; $65,000 capital gain • $0 ordinary income; $0 capital gain • $10,000 ordinary income; $5,000 capital gain .

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In a complete liquidation of a corporation the shareholders generally recognize income or gain ... View the full answer