Knowledge Check Activity 1
Pursuant to a complete liquidation, Swallow Corporation distributes to its shareholders land with a basis of $450,000 and a fair market value of $550,000. The land is subject to a liability of $600,000. Swallow's recognized gain or loss on the distribution is:
a. $0.
b. a $100,000 gain.
c. a $150,000 gain.
d. a $50,000 loss.
e. a $100,000 loss.