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One year ago Ryan made a capital contribution of a pretzel maker having a $2.000 adjusted basis and a $200 FMV to Ash Corporation in exchange for additional stock. This year, Ash Corporation adopted a plan of liquidation. Before the adoption of the liquidation plan, Ash had not used the pretzel maker in connection with the conduct of its trade or business. Which of the following statements is true?

One year ago Ryan made a capital contribution of a pretzel maker having a $2.000 adjusted basis and a $200 FMV to Ash Corporation in exchange for additional stock. This year, Ash Corporation adopted a plan of liquidation. Before the adoption of the liquidation plan, Ash had not used the pretzel maker in connection with the conduct of its trade or business. Which of the following statements is true?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 17 One year ago, Ryan made a capital contribution of a pretzel maker having a $2.000 adjusted basis and a $200 FMV to Ash Corporation in exchange for additional stock. This year, Ash Corporation adopted a plan of liquidation. Before the adoption of the liquidation plan, Ash had not used the pretzel maker in connection with the conduct of its trade or business. Which of the following statements is true? OA) Ash Corporation will recognize a loss of $1,800. OB) Ash Corporation will recognize a gain of $1,800 OC) Ash Corporation's basis for determining the loss will be $2.000 OD) Ash Corporation's basis for determining the loss will be $200
Transcribed Image Text:QUESTION 17 One year ago, Ryan made a capital contribution of a pretzel maker having a $2.000 adjusted basis and a $200 FMV to Ash Corporation in exchange for additional stock. This year, Ash Corporation adopted a plan of liquidation. Before the adoption of the liquidation plan, Ash had not used the pretzel maker in connection with the conduct of its trade or business. Which of the following statements is true? OA) Ash Corporation will recognize a loss of $1,800. OB) Ash Corporation will recognize a gain of $1,800 OC) Ash Corporation's basis for determining the loss will be $2.000 OD) Ash Corporation's basis for determining the loss will be $200
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