Reference no: EM132646817

Problem - Last year Lory Corporation, a land development company, acquired land and construction equipment from its sole shareholder in a § 351 transaction. At the time, the land had a basis of $790,000 and a fair market value of $650,000 and the equipment had a basis of $130,000 and a fair market value of $300,000. The assets were transferred to Lory Corporation for the purpose of developing the land and constructing a residential home community. However, the residential housing market suffered a steep decline in the current year, and as a result of financial difficulties, Lory Corporation was forced to sell its assets and liquidate. Pursuant to a plan of liquidation adopted during the year, Lory sold the land to an unrelated party for its current fair market value of $500,000. What amount of loss, if any, is recognized by Lory Corporation on the sale of the land?