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What is the effect on Mustang Corporation

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Question - Last year Mustang Corporation acquired land in a Section 351 tax-free exchange. On the date of transfer, the land had a basis $360,000 and a FMV of $500,000.Mustang Corp. has two shareholders, Skylar and Mandy unrelated individuals. Skylar owns 80% of the stock in Mustang and Mandy owns 20%. The corporation adopts a plan of liquidation in the current year. On this date the value of the land has decreased to $250,000. What is the effect of each of the following on Mustang Corporation?

A. Distribute all the land to Skylar.

B. Distribute all the land to Mandy.

C. Distribute 50% of the land to Skylar and 50% Mandy.

Reference no: EM132903579

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