Market Corporation owns 100% of Subsidiary Corporation's stock. Market Corporation completely liquidates Subsidiary Corporation, receiving land with a $400,000 adjusted basis and a $500,000 FMV in exchange for Subsidiary stock, which has a $300,000 adjusted basis. Market Corporation has a basis in the land of .
a. $300,000.
b. $400,000.
c. $500,000.
d. none of these

c. $500,000.

Explanation:

Market Corporation has a basis in the land of $500,000.

We are told in the question that ''Market Corporation completely liquidates Subsidiary Corporation, receiving land with a $400,000 adjusted basis and a $500,000 Fair Market Value''

In the event of liquidation the value of an asset is no longer its carrying amount or book value but rather the amount at which the asset can be disposed which is the fair market value.

b is the correct answer