The stock of kenny corp. is owned equally by two brothers. during 2013, they transferred land (basis of $300,000; fmv of $320,000) as a contribution to capital to kenny corp. during september, 2017, kenny corp. adopted a plan of complete liquidation and subsequently made a pro rata distribution of land back to the brothers. at the time of the liquidating distribution, the land had a fmv of $180,000. what amount of loss can be recognized by kenny corp. on the distribution of land?

long-term capital loss 140,000

Explanation:

the land enter the partnership at 320,000 cost

then it is being liquidate at 180,000

so it will be a capital-loss by 140,000

because it was held for more than two years It will be a long-term capital loss

This amount will be distributed amount the brother shares for profit and losses. Regardless of the fact that one of them contributed the land.

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