Treble, Inc., and Clef, Inc., are both taxable domestic C corporations. On January 1, 2018, Treble owned

Fantastic news! We've Found the answer you've been seeking!

Question:

Treble, Inc., and Clef, Inc., are both taxable domestic C corporations. On January 1, 2018, Treble owned 800 of the outstanding shares of the only class of stock of Clef. Deb owned the other 200 shares of Clef but owned none of the outstanding shares of Treble. Treble’s basis in its Clef stock was $200,000, and Deb’s basis in her stock in Clef was $50,000. Clef has $10,000 of accumulated earnings and profits on January 1, 2018. On October 13, 2017, Clef contributed numerous copyrights to a tax-exempt organization. By July 4, 2018, Clef had paid all its liabilities to third parties. Clef was subsequently liquidated on August 31, 2018. In the complete liquidation, Clef distributed to Treble a building and a computer, and to Deb a concert grand piano, and electric keyboard, and $82,000 in cash. Clef had no other assets other than an amount reserve for taxes.

Immediately before the distribution, the fair market values and Clef’s adjusted bases are as follows:

Asset FMV Clef’s adjusted basis

Building $550,000 $250,000

Computer 25,000 30,000

Piano 15,000 10,000

Keyboard 3,000 4,000

The building was subject to a $175,000 mortgage. All of the noncash assets Clef distributed were purchased on August 31, 2014, two months after the corporation was formed. Clef had claimed allowable depreciation on the building using the straight-line method.

Enter the correct amount or holding period (in number of months) for each item below. If the amount is zero, enter a zero (0).

ITEM	ANSWER
1. Loss recognized by Clef, Inc., on the distribution of the computer
2. Gain recognized by Clef, Inc., on the distribution of the concert piano
3. Treble, Inc.’s basis in the building
4. Treble, Inc.’s basis in the computer
5. Deb’s gain or loss recognized on the distribution of the piano, keyboard, and cash
6. Deb’s holding period for the piano on December 31, 2018
7. Deb’s holding period for the keyboard on December 31, 2018