How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask JKCPA Your Own Question
Category: Tax
Satisfied Customers: 5883
Experience:  CPA with tax experience.
Type Your Tax Question Here...
JKCPA is online now
A new question is answered every 9 seconds

In 2009, pursuant to a plan of complete liquidation, Woods

Resolved Question:

In 2009, pursuant to a plan of complete liquidation, Woods Corp. distributed all of its property to its shareholders. Among the property distributed was cash of $200,000, and land that had been held as an investment that had a basis of $100,000, and a fair market value of $160,000. The land was subject to a mortgage of $170,000 which the shareholders assumed. What amount of gain must Woods Corp. recognize as a result of its liquidating distributions?

a. $0
b. $10,000
c. $60,000
d. $70,000
Submitted: 5 years ago.
Category: Tax
Expert:  JKCPA replied 5 years ago.
Hi Customer,

Thanks for your question. The answer is:

d. $70,000
The mortgage of $170,000 exceeds the property’s FMV of $160,000, so the amount of
the mortgage must be used to determine the amount of recognized gain. $170,000 mortgage - $100,000 basis = $70,000 gain.

Hope this helps!
JKCPA and 2 other Tax Specialists are ready to help you