Bummer surrenders all of his stock with a basis of 187000


Loser Corporation decides to liquidate and files a plan of liquidation with the IRS. It is unable to sell its assets, so it distributes them to its sole shareholder, Bummer. There are only three assets: inventory (fair market value = $4,000; basis = $3,500), building (fair market value = $56,000; basis = $67,000), and machines (fair market value = $38,000; basis = $29,500). Bummer surrenders all of his stock with a basis of $187,000 in exchange for the property. What are the tax consequences to Loser and to Bummer as a result of this liquidation?

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Cost Accounting: Bummer surrenders all of his stock with a basis of 187000
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