Unformatted text preview: D PM#31 R 3-99 Page 43 Sky Corp. was a wholly-owned subsidiary of Jet Corp. Both corporations were domestic C corporations.
Jet received a liquidating distribution of property in cancellation of its Sky stock when Jet's tax basis in
Sky stock was $100,000. The distributed property had an adjusted basis of $135,000 and a fair market
value of $250,000. What amount of taxable gain did Jet, the parent corporation, recognize on the receipt
of the property?
Choice "d" is correct. No gain is recognized by Jet Corporation, the parent, upon the liquidation of Sky
Rule: No gain or loss is generally recognized in connection with the complete liquidation of a controlled
subsidiary (e.g., Sky Corp.) into its parent corporation (e.g., Jet Corp.). (Note: In addition, any unused net
operating loss carryovers or charitable contribution carryovers would be transferred to the successor
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land