Prime Corporation liquidates its 85% own subsidiary, Bass Corporation, under the provisions of Sec. 332 and 337. Bass Corporation distributes land to its minority shareholder, John, who owns 15% interest. The property received by John has a $55,000 FMV. The land was used in the Bass Corporation’s business and has a $65,000 adjusted basis and is subject to a $10,000 liability which is assumed by John. John’s basis of stock is $25,000. How will Prime Corporation determine the cost basis of the assets it recieves from Bass Corporation?
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