What are the tax effects to c corp

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Question - C Corp adopts a plan of liquidation. C Corp has two shareholders. B Corp and Irene, an individual. B Corp owns 90% of C Corp and Irene owns the remaining 10%.

C Corp only has two assets, which it acquired 7 years ago by purchase, with the following FMV and basis.

Land

FMV 900,000

Basis 400,000

Equipment

FMV 100,000

Basis 40,000

B Corp has a basis of 1,000,000 in its shares of C Corp and Irene has a basis of $20,000 in her shares.

It distributes the land to C Corp and distributes the equipment to Irene.

Required - What are the tax effects to C Corp, B Corp and Irene due to the liquidation?

Reference no: EM133048532

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