Shareholder Gain or Loss Calculation. For seven years, Monaco Corporation has been owned entirely by Stacy and Monique, who are husband and wife. Stacy and Monique have a $165,000 basis in their jointly owned Monaco stock. The Monaco stock is Sec. 1244 stock. They receive the following assets in liquidation of their corporation: accounts receivable, $25,000 FMV; a car, $16,000 FMV; office furniture, $6,000 FMV; and $5,000 cash.
a) What are the amount and character of their gain or loss?
b) How would your answer change if the accounts receivable instead had a $140,000 FMV?
c) What is the Monaco's basis for each property received in the liquidation in Parts a and b?