The stock in Black Corporation is owned by Sam and Susan, who are
unrelated.  Sam owns 80% and Susan owns 20% of the stock in Black
Corporation.  The following assets are to be distributed in complete
liquidation of Black Corporation.

                       Adjusted Basis            Fair Market Value
Cash                   $300,000                  $300,000
Inventory                75,000                   100,000
Equipment               200,000                   100,000

a.  What gain or loss would Black Corporation recognizes if it
distributes the cash and equipment to Sam and the inventory to Susan?
b.  What gain or loss would Black Corporation recognize if it
distributes the cash and inventory to Sam and the equipment to Susan?

Hi there,

a.  Black corporation will recognize a $25,000 gain of the
distribution of the inventory.

It will recognize no loss on the distribution of the equipment, The
distribution is to a related party and it is not pro rata.

b.  Black corporation would recognize both the $25,000 gain on the
inventory and the $100,000 loss on the distribution of the equipment. 
Susan is not a related party.

I found the question online:
http://omega.cc.umb.edu/~taxation/451e2s99.txt

And the answer on the same website:
http://216.239.33.100/search?q=cache:mI8yXXxV2KMC:omega.cc.umb.edu/~taxation/451s2s99.doc+site:omega.cc.umb.edu+%22Black+Corporation+%22&hl=en&ie=UTF-8


Search strategy: "stock in Black Corporation is owned by Sam and
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Best wishes,
robertskelton-ga