Corporation liquidation problem


The Trap Corporation liquidates. One shareholder, who owned 30 percent of the stock, receives for the stock, inventory worth $90,000 with a basis of $70,000. Trap Corporation will recognize:

a. $20,000 of capital gain

b. $20,000 of ordinary income

c. $20,000 of Sec. 1231 gain

d. No gain

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Accounting Basics: Corporation liquidation problem
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