Oriole, Inc. decided to liquidate its wholly-owned subsidiary, Tiger Corporation. Tiger had the following tax accounting balance sheet. FMV Adjusted basis AppreciationCash$400,000 $400,000 Building100,000 20,000 80,000Land300,000 180,000 120,000Total$800,000 $600,000 $200,000 a. What amount of gain or loss does Tiger recognize in the complete liquidation?b. What amount of gain or loss does Oriole recognize in the complete liquidation?c. What is Oriole's tax basis in the building and land after the complete liquidation?
What will be an ideal response?
a. No gain or loss is recognized.
b. No gain or loss is recognized.
c. $600,000. Oriole takes a carryover tax basis in each of Tiger's assets received in the liquidation.
a. Tiger does not recognize gain or loss on the liquidation because the liquidating distribution is to a corporation that owns 80 percent or more of Tiger.
b. Oriole does not recognize gain or loss on the receipt of the liquidating distribution because it owns 80 percent or more of Tiger.
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What will be an ideal response?