Cardinal corporation have in the assets

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Cardinal Corporation has a basis of $800,000 in the stock of Finch Corporation, a subsidiary in which it owns 90% of all classes of stock. Cardinal has maintained this ownership interest for more than four years. In the current year, Cardinal liquidates Finch Corporation and acquires assets worth $1,300,000 and with an adjusted basis to Finch of $750,000. At the time of liquidation, Finch had E & P of $400,000, and a short-term capital loss carryover of $25,000.

a. What is the recognized gain or loss to Finch and to Cardinal as a result of Finch's liquidation?

b. What basis will Cardinal Corporation have in the assets acquired from Finch Corporation?

c. What happens to Finch's E & P and short-term capital loss carryover?

Reference no: EM13124248

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