Section 332 governs the parent and Section 331 the founder, while the subsidiary is taxed under Section 336 only on the minority's share, in AC430's two-level Unit 10 liquidation. Searches like "ac 430 unit 10 assignment example", "ac430 unit 10 sample" and "ac430 unit 10 example" land here.
What a finished AC430 Unit 10 liquidation problem looks like
A distribution schedule followed by three consequence blocks. The schedule lists the subsidiary's assets at fair value: [$150,000] of cash, a building worth [$700,000] with a basis of [$250,000], and a land parcel worth [$150,000] with a basis of [$60,000]. The parent receives the cash and building, $850,000 in all, matching its 85 percent; the founder receives the land. Block one, the subsidiary: $90,000 of gain on the land distributed to the founder under Section 336, $18,900 of tax at 21 percent, and no gain on the building under Section 337. Block two, the parent: no gain under Section 332, a carryover basis in the building and the subsidiary's attributes inherited under Section 381. Block three, the founder: $110,000 of capital gain under Section 331.
How a AC430 Unit 10 example is structured
Qualification is established before any gain is computed, since Section 332 has conditions the facts must meet: the parent held at least 80 percent of vote and value under Section 1504(a)(2) from adoption of the plan through the final distribution, and the plan completes within the permitted period. The schedule then fixes who receives what at fair value. Each block works from the recipient's perspective with the same row labels, amount received, basis, gain recognized, basis in assets received, so the three can be read across. The founder's block uses her [$40,000] stock basis and gives her a fair value basis in the land under Section 334(a). A closing paragraph explains the $450,000 of unrecognized gain in the building: it survives in the parent's carryover basis, deferred rather than forgiven.
Does Section 332 apply?
Eighty percent of vote and value, held from plan adoption to final distribution, is confirmed before any figure is computed.
Who receives what
Cash and the building go to the parent and the land to the founder, each at fair value and in proportion to ownership.
Subsidiary: taxed on one asset
Section 336 taxes the $90,000 of gain on land distributed to the minority, while Section 337 shelters the building sent to the parent.
Parent: nothing recognized, everything inherited
Carryover basis under Section 334(b), a tacked holding period, and the subsidiary's E&P and carryovers under Section 381.
Founder: an ordinary sale of stock
Land worth [$150,000] against a [$40,000] stock basis gives $110,000 of capital gain and a fair value basis in the parcel.
Where marks go in AC430 Unit 10
Grading turns on whether the two shareholders are treated separately. A liquidation run entirely under Section 331, as if the parent were an individual, taxes $450,000 of gain that the Code defers. Running it entirely under Section 332 goes wrong the other way, sheltering the founder and the land. Many submissions miss the asymmetry at the subsidiary level: Section 337 protects only distributions to the 80 percent distributee, so the land sent to the founder is taxed as if sold. Loss property causes its own errors, since Section 336(d)(3) bars recognizing loss on any distribution in a Section 332 liquidation, including one to the minority. Basis in the parent's hands is often stated at fair value instead of carryover. The founder's gain is sometimes computed without her stock basis, which inflates it.
Get a AC430 Unit 10 example written to your instructions
Share the Unit 10 asset list with values and bases, the ownership split and your rubric. Qualification is confirmed, each recipient gets a consequence block, gain is reported at the corporate and shareholder levels, and the problem arrives in 24-48h. A first custom sample is free, with no real company or founder in it.
AC430 Unit 10 questions, answered
Why is the building's gain not taxed at all?
It is deferred rather than excused. Section 337 lets the subsidiary distribute to its 80 percent parent without recognizing gain, and Section 334(b) gives the parent the subsidiary's [$250,000] basis. The $450,000 of built-in gain therefore sits in the parent's hands and is taxed when the parent sells the building, not in the liquidation.
What if the parent owned only 70 percent?
Then Section 332 would not apply, the parent would be treated like any other shareholder under Section 331, and the subsidiary would recognize gain on every appreciated asset it distributed under Section 336. The example's first section exists because prompts often set the ownership near the line to see whether the 80 percent test is checked before anything else.
Does the example cover the subsidiary's final return?
It computes the gain and tax that return would carry, $90,000 and $18,900 at the flat 21 percent rate, and notes that the return is marked final. Filing mechanics, such as Form 966 reporting the plan of liquidation, are named in a sentence. A full return package would belong to a different kind of assignment.