Liquidations with liabilities in excess of fair market value


The following statements about property distributions in complete liquidations with liabilities in excess of fair market value are all false, except:

a. A loss may be recognized.

b. The shareholder receives a basis in the property equal to the amount of liability.

c. The distributor recognizes gain equal to the excess of liabilities over basis.

d. Since liabilities exceed fair market value, no depreciation recapture will occur.

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Accounting Basics: Liquidations with liabilities in excess of fair market value
Reference No:- TGS038771

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