On January 1 of the current year, Broadbent Corporation owned 90 percent of the outstanding stock of Anchorage Corporation. Both companies were domestic corporations. Pursuant to a plan of liquidation adopted by Anchorage in March, Anchorage distributed all of its property in complete redemption of its stock. Anchorage's accumulated earnings and profits were $18,000 on the distribution date. Anchorage has never been insolvent. As part of the liquidation, Anchorage distributed to Broadbent a parcel of land with a basis of $10,000 and a fair market value of $40,000 in redemption of its stock. How much gain must Anchorage recognize on the transfer of this land to Broadbent?
On January 1 of the current year, Broadbent Corporation owned 90 percent of the outstanding stock of Anchorage Corporation. Both companies were domestic corporations. Pursuant to a plan of liquidation adopted by Anchorage in March, Anchorage distributed all of its property in complete redemption of its stock. Anchorage's accumulated earnings and profits were $18,000 on the distribution date. Anchorage has never been insolvent. As part of the liquidation, Anchorage distributed to Broadbent a parcel of land with a basis of $10,000 and a fair market value of $40,000 in redemption of its stock. How much gain must Anchorage recognize on the transfer of this land to Broadbent?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1 of the current year, Broadbent Corporation owned 90 percent of the outstanding stock of Anchorage Corporation. Both companies were domestic corporations. Pursuant to a plan of liquidation adopted by Anchorage in March, Anchorage distributed all of its property in complete redemption of its stock. Anchorage's
$18,000
on the distribution date. Anchorage has never been insolvent. As part of the liquidation, Anchorage distributed to Broadbent a parcel of land with a basis of
$10,000
and a fair market value of
$40,000
in redemption of its stock. How much gain must Anchorage recognize on the transfer of this land to Broadbent?
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