LESSON 8
COMPLETE LIQUIDATIONS
8A General
(4) This may be one of those “rare and extraordinary” cases in which the taxpayer is entitled to assert that the transaction is “open.” Regs. § 15A.453-1(d)(2)(iii); B&E ¶ 10.05[2]. Assuming the contingent right has no ascertainable fair market value, X must recognize only $700 gain (a now-or-never advantage for the liquidating corporation) and A takes the contingent right with a zero basis. Upon collecting any amount under it, A would recognize additional capital gain of the same nature as the gain originally recognized on the stock. Likewise, B should then adjust his basis in the building upward by $500. IRC § 1016(a)(1). It the building is a § 1060 trade or business, then the § 338 regulations can apply.