Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation. Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year. The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation. As a result of the liquidation, Parent must recognize a

A. $300,000 gain.
B. $0 gain.
C. $200,000 gain.
D. none of the above1.

correct option is B. $0 gain.

Explanation:

given data

owns stock  = 100%

Subsidiary stock = $500,000

assets adjusted basis =  $700,000

FMV at liquidation = $800,000

solution

A subsidy recipient may cause a general benefit or loss to the shareholder, although this is not an accurate estimate of the complete liquidation of certain subsidiaries. The conditions for such treatment are:

The above two situations appear in the questionnaires. If the parent company has 100% single stock shares and liquidation in the taxable year, the profit will not be recognized.

correct option is B. $0 gain.

answer; /// the use of a bank credit card to make purchase;

answerattainable;