U-Pick Fruit Corp., a C Corporation, was formed many years ago as a "you pick" farm where customers can pick various types of fruits fresh from the source. Strawberry owned 500 out of 1,000 shares of common stock of U-Pick Fruit Corp. Her basis in the stock was $5,500,000. U-Pick Fruit Corp. liquidated, and in the process, after the corporation paid all of its debts, it distributed to Strawberry the following assets: • $11 million in cash, and • Berryacre, a parcel of real estate previously used in its trade or business (U-Pick Fruit's adjusted basis in Berryacre was $16,500,000 and the fair market value at date of distribution was $55,000,000). How much gain (loss) does Strawberry recognize due to these transactions? $38,500,000 $44,000,000 $60,500,000

U-Pick Fruit Corp., a C Corporation, was formed many years ago as a "you pick" farm where customers can pick various types of fruits fresh from the source. Strawberry owned 500 out of 1,000 shares of common stock of U-Pick Fruit Corp. Her basis in the stock was $5,500,000. U-Pick Fruit Corp. liquidated, and in the process, after the corporation paid all of its debts, it distributed to Strawberry the following assets: • $11 million in cash, and • Berryacre, a parcel of real estate previously used in its trade or business (U-Pick Fruit's adjusted basis in Berryacre was $16,500,000 and the fair market value at date of distribution was $55,000,000). How much gain (loss) does Strawberry recognize due to these transactions? $38,500,000 $44,000,000 $60,500,000

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

U-Pick Fruit Corp., a C Corporation, was formed
many years ago as a "you pick" farm where
customers can pick various types of fruits fresh from
the source. Strawberry owned 500 out of 1,000
shares of common stock of U-Pick Fruit Corp. Her
basis in the stock was $5,500,000. U-Pick Fruit
Corp. liquidated, and in the process, after the
corporation paid all of its debts, it distributed to
Strawberry the following assets:
• $11 million in cash, and
• Berryacre, a parcel of real estate previously used
in its trade or business (U-Pick Fruit's adjusted
basis in Berryacre was $16,500,000 and the fair
market value at date of distribution was
$55,000,000).
How much gain (loss) does Strawberry recognize due
to these transactions?
$38,500,000
O $44,000,000
$60,500,000
O $49,500,000

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