LMN Inc. liquidated. Pursuant to the plan of liquidation, one shareholder, Mel, who owned 30...
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LMN Inc. liquidated. Pursuant to the plan of liquidation, one shareholder, Mel, who owned 30 percent of the stock of LMN Inc., received as a distribution in exchange for all of his stock in the corporation, inventory worth $90,000 that had a basis to the corporation of $70,000. How much gain was recognized by LMN Inc. as a result of this liquidating distribution and what was the character of the gain?
a. $0 gain.
b. $20,000 capital gain.
c. $20,000 ordinary income.
d. $20,000 Section 1231 gain.
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