Under a plan of complete liquidation, Coast Corporation distributes land with a $300,000 adjusted basis and a $400,000 FMV to William, a 25% shareholder. William has a $200,000 basis in his Coast stock. The land is inventory in the hands of Coast Corporation. Coast Corporation must recognize
A. $100,000 of long-term capital gain.
B. $100,000 of ordinary income.
C. $200,000 of ordinary income.
D. no gain.
Answer: B
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