Acorporation distributes a piece of personal property to a shareholder, in complete liquidation. the corporation had a basis of $40,000. the property's fmv is $30,000. the effect to the corporation

The corporation must recognize a $10,000 loss.

Explanation:

The last activity that a corporation must perform upon liquidation is to distribute property, assets or cash to its shareholders. The adjusted basis for any property or assets handed out in a complete liquidation is the fair market value of the property or assets.

In this case, the corporation's property had a basis of $40,000 but a fair market value of $30,000, so the distribution was done using the fair market value of $30,000.

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