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Sandy, a Cash Method of Accounting Taxpayer, Has a Basis

Question 33

Multiple Choice

Sandy, a cash method of accounting taxpayer, has a basis of $46,000 in her 500 shares of Newt Corporation stock. She receives the following distributions as part of Newt's plan of liquidation. Sandy, a cash method of accounting taxpayer, has a basis of $46,000 in her 500 shares of Newt Corporation stock. She receives the following distributions as part of Newt's plan of liquidation. The amount of the final distribution is not known on December 31, 2017. What are the tax consequences of the distributions? A) Sandy will recognize a loss of $4,500 in 2017 and a $1,500 loss in 2018. B) Sandy will recognize the entire loss in 2017. C) Sandy will recognize the entire loss in 2018. D) None of the above is correct. The amount of the final distribution is not known on December 31, 2017. What are the tax consequences of the distributions?


A) Sandy will recognize a loss of $4,500 in 2017 and a $1,500 loss in 2018.
B) Sandy will recognize the entire loss in 2017.
C) Sandy will recognize the entire loss in 2018.
D) None of the above is correct.

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