10Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In the exchange, RedBlossom received land with a fair market value of $617,500. The corporation's basis in the Tea Company stock was $407,500. The land had a basis to TeaCompany of $682,500. What amount of gain does Red Blossom recognize in the exchange and what is its basis in the land it receives?Multiple Choice$210,000 gain recognized and a basis in the land of $682,500.$210,000 gain recognized and a basis in the land of $617,50o.No gain recognized and a basis in the land of $682,500.No gain recognized and a basis in the land of $275,000.

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Answered: 10 Red Blossom Corporation transferred…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In the exchange, Red Blossom received land with a fair market value of $617,500. The corporation's basis in the Tea Company stock was $407,500. The land had a basis to Tea Company of $682,500. What amount of gain does Red Blossom recognize in the exchange and what is its basis in the land it receives? Multiple Choice $210,000 gain recognized and a basis in the land of $682,500. $210,000 gain recognized and a basis in the land of $617,500. No gain recognized and a basis in the land of $682,500. No gain recognized and a basis in the land of $275,00.

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