you indicate that the assets were sold at FMV since this is in dissolution of the S-corp. Thus there will be gain or loss recognized.
When appreciated property (property that has an FMV in excess of its adjusted basis) is distributed, gain is recognized in the same manner as if the S corporation had sold the property to the shareholders at its FMV (Sec. 311(b) via Sec. 1371(a)). The gain passes through to the shareholders and increases their basis in their stock. No loss is allowed, however, if the distributed property has an FMV that is less than the corporation’s tax basis in such property. (Under Sec. 336, a loss can be recognized if the distribution is in liquidation of the corporation.) The shareholder’s basis in the distributed property is its FMV (Sec. 301(d)).
