William Norwalk, Transferee, et al. - Page 13

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          accountants themselves owned the intangibles, and, thus, there              
          was no transfer nor any corresponding taxable gain attributable             
          to these intangibles.                                                       
               Generally, gain or loss must be recognized by a liquidating            
          corporation on the distribution of property in complete                     
          liquidation as if such property were sold to the distributee at             
          its fair market value.  Sec. 336(a).  Petitioners do not contend            
          that the provisions of section 336(a) should not apply here.  The           
          corporation must recognize gain calculated as the difference                
          between the fair market value of the distributed property and the           
          corporation's basis in that property.                                       
               Moreover, amounts received by the shareholders in a                    
          distribution in complete liquidation of the corporation must be             
          treated as in full payment in exchange for the corporation's                
          stock.  Sec. 331(a).  The shareholders must recognize any gain on           
          the receipt of the property in the liquidating distribution.  The           
          gain to the shareholder is computed by subtracting the                      
          shareholder's adjusted basis in the stock from the amount                   
          realized.  Sec. 1001(a); sec. 1.331-1(b), Income Tax Regs.  The             
          amount realized is the sum of any money received on the                     
          distribution plus the fair market value of the property received            
          (other than money).3  Sec. 1001(b).  This gain is reduced by the            

               3Sec. 1.331-1(e), Income Tax Regs., provides that a                    
          shareholder's gain or loss on a liquidating distribution be                 

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