Question

Robot Corporation is liquidated, with Marty receiving property having an adjusted basis of $60,000 and an FMV of $90,000. The property is subject to a $80,000 mortgage, which Marty assumes. Marty's basis in the Robot stock surrendered is $50,000. Marty must recognize

A) a $40,000 loss
B) no gain or loss
C) a $60,000 gain
None of the above

Answer 1

-$40,000

Step-by-step explanation:

Data provided as the question

FMV = $90,000

Assumed Liability = $80,000

Stock basis = $50,000

The computation of recognize is shown below:-

= FMV of property - Assumed Liability - Stock basis

= $90,000 - $80,000 - $50,000

Recognize Loss = -$40,000

Therefore for computing the recognize loss we simply deduct the assumed liability and stock basis from FMV of property.