Pursuant to a complete liquidation, woodpecker corporation distributes the following assets to its unrelated shareholders: land held for six years as an investment(basis of $100,000, fair market value of $300,000), inventory(basis of $100,000, fair market value of $140,000), and marketable securities held for two years as an investment(basis of $200,000, fair market value of $120,000). What are the tax results to Woodpecker Corporation as a result of the liquidation?
a. Woodpecker Corporation would recognize ordinary income of $40,000 and a net capital gain of $200,000.
b.Woodpecker Corporation would recognize income of $40,000 and a net capital gain of $120,000.
c.Woodpecker Corporation would recognize income of $40,000 and a net capital loss of $80,000.
d.Woodpecker Corporation would recognize no gain or loss on the liquidation.
e. None of the above.
Kingberd Corporation(E&P of $800,000) has 1,000 shares of stock outstanding. That stick is held by Amata(550 shares) and Esteban(450 shares), who are unrelated individuals. Kingbird redeems 200 of Amata's shares for $1,000 per share. Amata paid $300 per share for her Kingbird stock nine years ago.
Whick of the following statements is correct with respect to the stock redemption?
a. Amata has dividend income of $200,000.
b. Amata has a long-term capital gain of $140,000.
c. Amata's basis in her remaining 350 shares is $60,000.
d. Kingbird reduses its E&P by $200,000.
e. None of the above.