Question

Please ignore question 14.

- 13. Magenta Corporation acquired land in a $ 351 exchange one year ago. The land ha fair market value of $350,000 on the date of the tran exchange one year ago. The land had a basis of $320,000 and a et vullie of $350,000 on the date of the transfer. Magenta Corporation has two shareholders, Mark (10%) and Megan (30%), who are brother and sister. Magenta Corporation adopts a plan of liqui current year. On this date, the land has decreased in value to $250,000. Magenta Corporation selt Juvu ana distributes the proceeds pro rata to Mark and Megan. What amount of loss may Magenta Corporation recognize on the sale of the land? a. $0 b. $21,000 c. $30,000 d. $70,000 e. None of these 55,000 - 40,000 215,000 14. Robin Corporation distributes furniture (basis of $40,000: fair market value of $50,000) as a property dividend its shareholders. The furniture is subject to a liability of $55.000. Robin Corporation recognizes gan a. $55.000. b. $15,000. Liability - ban's c. $10,000 d. $0. 50 e. None of these _ 15. Interpret the following citation: 64-1 USTC 49618, aff'd in 344 F.2d 966. a. A U.S. Tax Court Small Cases Division decision that was affirmed on appeal. - b. A U.S. Tax Court decision that was affirmed on appeal. C. À U.S. District Court decision that was affirmed on appeal. d. A U.S. Court of Appeals decision that was affirmed on appeal. e. None of these. Huntintries Corneration that become worthless in th

Answer 1

Ans13_ d)
RATIONALE: The related-party loss limitation does not apply to sales. The property does not have a built-in loss on the date of the transfer to the corporation; thus, the built-in loss limitation does not apply. The basis of the property to Magenta Corporation is $320,000 and, upon a sale of the property for $250,000, Magenta Corporation would recognize the $70,000 loss.

ANS 15: c)
EXPLANATION:
USTCs report decisions of the U.S. District Courts, Court of Federal Claims, Circuit Court of Appeals, and the Supreme Court. They do not report the decisions of the U.S. Tax Court. West’s F. 2d series reports the decisions of the U.S. Claims Court (before October 1982) and the Circuit Courts of Appeal. They do not report the decisions of the U.S. Tax Court, U.S. District Courts, and the Supreme Court. In the light of these conditions, what are the possibilities.
_Choice a. is not possible, since there is no appeal from the Small Cases Division of the U.S. Tax Court.
_Choice b. is not possible because the USTC series does not contain the decision of the U.S. Tax Court.
_Choice d. is not possible since an appeal from the Circuit Court of Appeals would have been to the U.S. Supreme Court.
_What the citation represents, therefore, is the affirmation of an appeal of a U.S. District Court decision (reported in the USTCs) by a Circuit Court of Appeals (reported in the F.2d series) or choice c.