Problem
Moe and Curley, brothers, own all of the stock in Susquehanna Hat, Inc. Moe owns 60% and Curley 40%. Three years ago, they transferred real property (basis: $175,000, FMV: $160,000) to the corporation as a contribution to capital. This year they adopted a plan of complete liquidation pursuant to the land is to be distributed to them pro rata. Due to failing market conditions, the property had declined in value to $80,000. What amount of loss will Susquehanna recognize on the distribution of the property?
a. $0
b. $15,000
c. $80,000
d. $95,000
e. None of the above.