The Stock of Cardinal Corporation Is Held as Follows: 90

Multiple Choice

The stock of Cardinal Corporation is held as follows: 90% by Blue Jay Corporation (basis of $500,000) and 10% by Samuel (basis of $70,000) .Cardinal Corporation is liquidated in October of the current year, pursuant to a plan adopted earlier in the year.Pursuant to the liquidation, Cardinal Corporation distributed Asset A (basis of $450,000, fair market value of $720,000) to Blue Jay, and Asset B (basis of $45,000, fair market value of $80,000) to Samuel.No election is made under § 338.With respect to the liquidation of Cardinal:

A) Cardinal Corporation recognizes a gain of $35,000.
B) Blue Jay has a basis in Asset A of $720,000.
C) Samuel recognizes no gain (or loss) .
D) Blue Jay recognizes a gain of $220,000.
E) None of the above.