Parent Corporation owns all of Subsidiary Corporation's stock. In addition, Parent Corporation owns $100,000 (face amount and basis) of Subsidiary Corporation's bonds. When Subsidiary Corporation is completely liquidated, it distributes property with a $70,000 adjusted basis and a $100,000 FMV to Parent Corporation in redemption of the Subsidiary Corporation bonds. Following the liquidation,
Parent Corporation will have a basis in the Subsidiary Corporation property received for the bonds of
A) $0.
B) $70,000.
C) $100,000.
D) none of the above
B) $70,000.
Parent takes a carryover basis from Subsidiary Corporation's books for the property it receives in cancellation of the bonds.
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