Comprehenslve Problem $14-75($LO $14-1,$ LO $14-2,$ LO $14-3,$ LO $14-4,$ LO $14-5)($Algo$)$

Rex and Fellx are the sole shareholders of Dogs and Cats Corporation $($DCC$).$ After several years of operations using the accrual

method, they decided to liquidate the corporation and operate the business as a partnership. Rex and Fellx hired a lawyer to draw up

the legal papers to dissolve the corporation, but they need some tax advice from you, thelr trusted accountant. They are hoping you

will find a way for them to liquidate the corporation while minimizing their total income tax liability.

Rex has a tax basis in his shares of $$145,500$ and Fellx has a tax basis in his shares of $$48,500.$ DCC$\text{'}$s tax accounting balance sheet at

the date of liquidation is as follows:

Required:

a$.$ Compute the gain or loss recognized by Rex, Fellx, and DCC on a complete liquidation of the corporation assuming each

shareholder recelves a pro rata distributlon of the corporation's assets and assumes a pro rata amount of the liabilitles.

b$.$ Compute the gain or loss recognized by Rex, Fellix, and DCC on a complete liquidation of the corporation assuming that Fellix

recelved cash in lieu of his pro rata share of assets and liabilitles.

For parts c and d: Assume Fellix recelved the accounts recelvable and equipment and assumed the accounts payable for the

following two questions.

c$.$ Will Fellx recognize any Income when he collects the accounts recelvable?

d$.$ Will Fellx be able to take a deduction when he pays the accounts payable?

For parts e and f$.$ Assume Rex is a corporate shareholder of DCC for the following two questions.

e$.$ Compute the gain or loss recognized by Rex, Fellx, and DCC on a complete liquidation of the corporation assuming each

shareholder recelves a pro rata distributlon of the corporation's assets and assumes a pro rata amount of the liabilities.

f$.$ Compute the gain or loss recognized by Rex, Fellx, and DCC on a complete liquidation of the corporation assuming Fellix recelves

$$55,000$ In cash and Rex recelves the remainder of the assets and assumes all the liabilities.

Complete this question by entering your answers in the tabs below.Required $A$ to

Required C to

Required E to

B

D

F

a$.$ Compute the gain or loss recognized by Rex, Felix, and DCC on a complete liquidation of the corporation assuming each

shareholder receives a pro rata distribution of the corporation's assets and assumes a pro rata amount of the liabilities.

b$.$ Compute the gain or loss recognized by Rex, Felix, and DCC on a complete liquidation of the corporation assuming that

Felix received cash in lieu of his pro rata share of assets and liabilities.

Note: For both requirements, negative amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if

applicable.