Corporation X owns a rental building with an FMV of $4,500, subject to a nonrecourse mortgage of $5,000. X's basis in the building is $2,000. X has E&P of $500. A, the only shareholder, has a basis of $300 in X stock. The rental building is distributed to A upon complete liquidation of X. Please comment on the issues raised below and any other advice you would provide to the client. What, if any, gain or loss recognized by Corporation X? What amount of E&P remains post-liquidation? What is the gain or loss recognized by A? What is A's basis in the rental building? Does the gain or loss to X and A change if the FMV of the building is $1,000 and the mortgage is also $1,000?

Corporation X owns a rental building with an FMV of $4,500, subject to a nonrecourse mortgage of $5,000. X's basis in the building is $2,000. X has E&P of $500. A, the only shareholder, has a basis of $300 in X stock. The rental building is distributed to A upon complete liquidation of X. Please comment on the issues raised below and any other advice you would provide to the client. What, if any, gain or loss recognized by Corporation X? What amount of E&P remains post-liquidation? What is the gain or loss recognized by A? What is A's basis in the rental building? Does the gain or loss to X and A change if the FMV of the building is $1,000 and the mortgage is also $1,000?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges

Section: Chapter Questions

Problem 35P

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