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How much total gain must corp sub recognize

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Question - FACTS: A, an individual, owns 15% of all the stock in Corp. Sub.

A's stock in Corp. Sub has a FMV of $1,500, an adjusted basis of $750, and a holding period of 2 years. Corp. X owns the remaining 85% of Corp. Sub's stock. Corp. X's stock in Corp. Sub has a FMV of $8,500, an adjusted basis of $5,000, and a holding period of 2 years.

Corp. Sub will completely liquidate. Corp. Sub owns two assets at the time of its liquidation. Asset #1 has a FMV of $1,500, an adjusted basis of $600 and a holding period of 2 years. Asset #2 has a FMV of $8,500, an adjusted basis of $6000, and a holding period of 2 years. Corp. Sub distributes Asset #1 to A and Asset #2 to Corp. X in complete liquidation.

Required -

1. How much total gain, if any, must Corp. Sub recognize?

2. How much total gain, if any, must individual A recognize?

3. How much total gain, if any, must Corp. X recognize?

4. What basis does individual A have in Asset #1?

5. What basis does Corp. X have in Asset #2?

Reference no: EM132796176

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