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Identify which of the following statements is true.

A) Section 336 prevents recognition of a loss when making a pro rata distribution of property toa related person.

B) A liquidating distribution of property other than a disqualified property that is made ratablyto all shareholders (based on their stockholdings) will permit the recognition of loss on theportion of the distribution that is made to a related person.

C) A subsidiary corporation can recognize losses on distributions to either the parent corporationor minority shareholders in a Sec. 332 liquidation.

D) All of the above are false

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Answer:

Option A only is observed to be true.

Explanation:

A subsidiary corporation cannot detect losses on distribution on either the parent corporation or minority shareholders- in Sec 322 liquidation.

in addition, Section 336 does not prevent the  detection of a loss when making a pro-rata distribution of property to a related person.

Therefore, only option A is observed to be true.

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