[Anonymous]

Hi,

I’m working through Question #1830 which is as follows:

Krol Corp. distributed marketable securities in redemption of its stock in a complete liquidation. On the date of distribution, these securities had a basis of $100,000 and a fair market value of $150,000. What gain does Krol have as a result of the distribution?

A. $0

B. $50,000 capital gain

C. $50,000 Section 1231 gain

D. $50,000 ordinary gain

Correct Answer: B

Can anyone explain why it’s a capital gain instead of anordinary gain? I thought corporations recorded the gain as ordinary when it’s a complete liquidation. Thanks!

[Gabe]

It's been a while, but the only ordinary gain would be for AR , I believe.

AUD: 84
BEC: 76
FAR: 81
REG: 4/3/15

OK Candidate

[Author]

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