QUESTION 17 The stock of Vanilla Corporation is held as follows: 80% by Charles
ID: 2539077 • Letter: Q
Question
QUESTION 17 The stock of Vanilla Corporation is held as follows: 80% by Charles Corporation (basis of $400,000) and 20% by Tiffany (basis of $100,000). Vanilla Corporation is liquidated in December of the current year, pursuant to a plan adopted earlier in the year. Pursuant to the liquidation, Vanilla Corporation distributed Asset A (basis of $500,000, fair market value of $900,000) to Charles, and Asset B (basis of $250,000, fair market value of $225,000) to Tiffany. No election is made under § 338, with respect to the liquidation of Vanilla, Charles has a basis in Asset A of: 0 s abs of 822^bas to QUESTION 18 A shareholder bought 10,000 shares of Amazon Corporation for $40,000 several years ago. When the stock is valued at $100,000, Amazon redeems the shares in exchange for 6,000 shares of Tattoo Corporation stock and a $15,000 Tattoo bond. This transaction meets the requirements of § 368. The shareholder has a recognized gain of OUESTION19Explanation / Answer
17. Since, no election is made under 338, Charles has a basis in Asset A of $5,00,000
18.The shaareholder has recognised a gain of $75,000.