Jack Corporation Is Owned 75% by Sherri and 25% by Mark

Essay

Jack Corporation is owned 75% by Sherri and 25% by Mark. Sherri and Mark have $125,000 and $50,000 bases in their stock, respectively. Jack Corporation adopts a plan of liquidation on March 1. On April 12, Sherri receives the following property as a liquidating distribution: cash of $30,000; land, $125,000 FMV; and 150 shares of Green Corporation stock, $30,000 FMV. The land is subject to a $20,000 mortgage. On the same date, Mark receives $10,000 FMV of Green stock (50 shares)and cash of $45,000 as a liquidating distribution. The land has a basis of $50,000 and the stock has a basis of $70,000 in Jack Corporation's hands. Both are capital assets to Jack Corporation and have been held for a number of years.
a)What is the amount and character of Jack Corporation's recognized gain or loss on the liquidating distributions?
b)What are the amounts and characters of Sherri and Mark's recognized gains or losses?
c)What are the bases of the land and stock to Sherri and Mark?