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. 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

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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​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.

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

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