Calamity corp. distributes five unimproved parcels of swampland to its shareholders as part of a complete liquidation. the fair market value of each parcel is $25,000 and calamity’s adjusted basis in each parcel is $40,000. what amount of gain or loss will calamity corp. recognize as a result of distributing the parcels?

-$75,000

Explanation:

We simply substract the adjusted basis value from the market value

Adjusted value = $40,000 x 5

                         = $200,000

Fair Maket Value = $25,000 x 5

                             = $125,000

Calamity Corp. gain/loss = $125,000 - $200,000

                                         = -$75,000

Therefore, Calamity Corp will recognize a loss of $75,000 as a result of distributing the parcels.

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