Tax Implications Of Business Sale/Liquidation Practice Test

Alder, Inc., a C corporation, is deciding between (i) selling stock to an unrelated buyer or (ii) selling assets and liquidating. Alder’s shareholders have held the stock for more than one year, and Alder’s assets are appreciated. Which tax impact is most accurate when comparing the two alternatives under Sections 331 and 336?

Delta Co., a C corporation, will be sold to an unrelated buyer and is choosing between a stock sale and an asset sale followed by liquidation. Delta’s shareholders have stock basis of $300,000 (held more than one year); Delta’s assets have aggregate adjusted basis of $900,000 and fair market value of $1,500,000. What is the tax impact of choosing an asset sale followed by liquidation compared with a stock sale, focusing on whether gain is recognized at both the corporate and shareholder levels under Sections 336 and 331?