Explain the differences in the tax rules applying to distributions made to the parent corporation and a minority shareholder when a controlled subsidiary corporation liquidates.

A.

Generally, a parent corporation and a minority shareholder recognize neither gain or loss when a liquidting distribution is received.

B.

Generally, a parent corporation recognizes neither gain or loss when receiving a liquidating distribution and a minority shareholder recognizes gain or loss when receiving the distribution.

C.

A parent corporation never recognizes gain or loss when it receives a liquidating distribution. A minority shareholder will recognize gain on a liquidating distribution when cash is received, however no gain or loss is recognized on the distribution of property.

D.

A parent corporation recognizes gain or loss when it receives a liquidating distribution of cash, however no gain or loss is recognized on the distribution or property. A minority shareholder will recognize gain or loss when receiving the distribution