Reference no: EM132842371

?ABC? Corporation?? (??ABC??) owns?? 90% of the single class of stock in Subsidiary Corporation?.? The?? other?? 10% is owned? by? ?? Rosie?? ,? an?? individual.?? ABC's basis in its Subsidiary? ? stock?? is?? $?? 200,000? and??? Rosie's? basis?? is?? $90,000. Subsidiary distributes property A having an? adjusted? basis?? of?? $150,000 and? an? FMV?? of?? $720,000? to?? ABC?? , and property B with a? FMV? of?? ?? $80,000 and an? adjusted? basis?? of?? $60,000 to Rosie in a liquidating distribution.? ? Subsidiary?? had?? $10 million of earnings and profits at the date of liquidation.

Problem 1: What basis do ABC and Rosie have in the property received in the liquidating? distribution??

A. ABC basis in property A? $200,000; Rosie's basis in property B? $80,000

B. ?ABC's basis in property A? $150,000; Rosie's basis in property B? $90,000

C. ?ABC's basis in property A? $720,000; Rosie's basis in property B? $80,000

D. ABC basis in property A? $150,000 ;? Rosie's basis in property B? $80,000 in property B