Under a plan of complete liquidation coast corporation, Ask an Expert

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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. no gain

b. $100,000 of ordinary income.

c. $100,000 of long-term capital gain.

d. $200,000 of ordinary income.

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