Compute Indigo recognized gain or loss

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Problem - Indigo Corporation wants to transfer cash of $150,000 or property worth $150,000 to one of its shareholders, Linda, in a redemption transaction that will be treated as a qualifying stock redemption. If Indigo distributes property, the corporation will choose between two assets that are each worth $150,000 and are no longer needed in its business: Property A (basis of $75,000) and Property B (basis of $195,000).

Required -

a. Compute Indigo's recognized gain or loss if it distributes Property A in redemption of Linda's shares.

b. Compute Indigo's recognized gain or loss if it distributes Property B in redemption of Linda's shares.

c. Compute Indigo's recognized gain or loss if it sells Property B to an unrelated party, then distributes the sale proceeds in redemption of Linda's shares.

Reference no: EM132646720

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