What amount of gain each olinto corp shareholder recognize

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Problem - Olinto Corp., an accrual basis calendar year C corporation, had no corporate shareholders when it liquidated in year 12. In cancellation of all their Olinto Corp. stock, each Olinto Corp. shareholder received in year 12 a liquidating distribution of $12,000 cash and land with a corporate tax basis of $15,000 and a fair market value of $20,500. Before the distribution, each shareholder's tax basis in Olinto Corp. stock was $16,500. What amount of gain should each Olinto Corp. shareholder recognize on the liquidating distribution?

a. $0

b. $10,500

c. $4,000

d. $16,000

Reference no: EM132662543

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