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Category: Tax
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Experience:  CPA with tax experience.
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Mark receives a liquidating distribution from Arosa Corporation

Resolved Question:

Mark receives a liquidating distribution from Arosa Corporation as part of a redemption of all of its stock. Mark’s basis for his Arosa stock is $10,000. In exchange for his stock, Mark receives property with a $10,000 basis and a $25,000 fair market value that is subject to a $12,000 mortgage, and also receives cash of $15,000. What is Mark’s recognized gain?

a. $42,000
b. $30,000
c. $18,000
d. $3,000
Submitted: 5 years ago.
Category: Tax
Expert:  JKCPA replied 5 years ago.
Hello Customer,

Thanks for your question.

The answer is c. $18,000
Property FMV $25,000 + cash 15,000 - mortgage (12,000)
=Amount realized $28,000 - stock basis 10,000
=Recognized gain $18,000

Hope this helps!
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