Liquidating corporation with negative equity
1231 property to J and he sells the building for its 0,000 FMV, he will realize a Sec.1231 loss of 0,000, which will be ordinary, assuming he has no other Sec.J will recognize no gain or loss on the distribution and will have a basis in the distributed office building of 0,000, the basis of his LLC interest after reduction for the 0,000 of cash received.(Note that the distribution of property with related depreciation recapture may result in the recognition of gain if the distribution is a disproportionate distribution of hot assets.) If the building continues to be Sec.The inventory has an adjusted basis of ,000 to L.
The LLC has no unrealized receivables or appreciated inventory, so Sec. The LLC acquired the real property by R recognizes no gain or loss on the liquidation.
704(c)(1)(B)); (3) the distribution is within seven years after a contribution of appreciated property (see Sec. He has never contributed property other than cash to the LLC.