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Exercise 20-13 (LO. 1) Pursuant to a complete liquidation, Carrot Corporation distributes to its shareholders real...
22. Under a plan of complete liquidation, Cain Corporation distributes land (not a property) with an...
22. Under a plan of complete liquidation, Cain Corporation distributes land (not a property) with an adjusted basis of $410,000 and an FMV of $300,000 for all Gary's stock. Gary's basis in his 10% interest in the Cain stock is $250.000. Find Gary's basis in the land and Cain Corporation's recognized gain or loss. A) Recognized Gain/Loss $110,000 loss Recognized Gain/Loss $110,000 loss Basis $300,000 B) Basis $250,000 C) Basis $300,000 D) Basis $250,000 Recognized Gain/Loss SO Recognized Gain/Loss SO...
Exercise 20-14 (LO. 1) Osprey Corporation stock is owned by Pedro and Pittro, who are unrelated....
Exercise 20-14 (LO. 1) Osprey Corporation stock is owned by Pedro and Pittro, who are unrelated. Pedro and Pittro each own 50% and Pittro owns 50% of the stock in the corporation. Osprey has the following assets (none of which were acquired in a § 351 or contribution to capital transaction) that are distributed in complete liquidation of the corporation Adjusted Fair Market Value Cash Land Equipment Basis $300,000 200,000 250,000 $300,000 440,000 140,000 Assume that Osprey Corporation distributes the...
22. Under a plan of complete liquidation, Cain Corporation distributes land (not a disqualified property) with...
22. Under a plan of complete liquidation, Cain Corporation distributes land (not a disqualified property) with an adjusted basis of $410,000 and an FMV of $300,000 for all Gary's stock. Gary's basis in his 10% interest in the Cain stock is $250,000. Find Gary's basis in the land and Cain Corporation's recognized gain or loss. A) Basis Recognized Gain/Loss $300,000 $110,000 loss B) Basis Recognized Gain/Loss $250,000 $110,000 loss C) Basis Recognized Gain/Loss $300,000 $0 D) Basis Recognized Gain/Loss $250,000...
During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena,...
During the current year, Ecru Corporation is liquidated and distributes its only asset, land, to Kena, the sole shareholder. On the date of distribution, the land has a basis of $250,000, a fair market value of $650,000, and is subject to a liability of $500,000. Kena, who takes the land subject to the liability, has a basis of $120,000 in the Ecru stock. With respect to the distribution of the land, which of the following statements is correct? a. Kena...
Exercise 20-12 (LO. 1) Sunset Corporation, with E & P of $400,000, makes a cash distribution...
Exercise 20-12 (LO. 1) Sunset Corporation, with E & P of $400,000, makes a cash distribution of $120,000 to a shareholder. The shareholder's basis in the Sunset stock involved is $50,000 a. Determine the tax consequences to the shareholder if the distribution is a nonqualified stock redemption The shareholder has dividend incomeof b. Determine the tax consequences to the shareholder if the distribution is a qualifying stock redemption The shareholder has a capital gain of c. Determine the tax consequences...
18. Identify which of the following statements is true. A) With limited exceptions, a loss can...
18. Identify which of the following statements is true. A) With limited exceptions, a loss can be recognized by a liquidating corporation when it makes a liquidating distribution of property that has declined in value. B) When computing the corporate-level gain on a liquidating distribution, the FMV of the property cannot exceed the liability assumed or acquired by the shareholder. C) The FMV of property distributed by a liquidating corporation can be less than the amount of the liability assumed...
19. Geranova Corporation is liquidated, with Vlad receiving $7,500 in money, other property having a $5,000...
19. Geranova Corporation is liquidated, with Vlad receiving $7,500 in money, other property having a $5,000 FMV, and a $2,000 mortgage on the property. Vlad’s basis in his Geranova Co. stock is $7,000. Upon liquidation, Vlad must recognize a gain of A) 2,000. B) $3,500. C) $5,000. D) $12,500. 20. Illinois Corporation is undergoing a complete liquidation and distributes land to Maria, one of its shareholders, in exchange for all of Maria's stock. The land has a basis of $300,000...
Exercise 13-4 (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to...
Exercise 13-4 (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to Leilei, one of its shareholders, land worth $310,000; basis of the land to Fargo is $260,000. Determine the Federal income tax consequences of the distribution to Fargo. of $ 0 x . The net decrease to Fargo's E & P is $ 0 x . The Fargo Corporation recognizes a gain shareholder has dividend income of $ ox
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder...
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351, The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Fair Market Built in Gain Shareholder's Basis $300,000 $525,000 or (Loss) $375,000 $75,000 $400,000 ($125,000) ($50,000) Value Property 1 Property 2 Net built-in loss Martin adopts a plan of liquidation later in the year and...
Exercise 17-20 (LO. 1) Aqua Corporation purchases nonresidential real property on May 8, 2016, for $1,000,000....
Exercise 17-20 (LO. 1) Aqua Corporation purchases nonresidential real property on May 8, 2016, for $1,000,000. Straight-line cost recovery is taken in the amount of $89,765 before the property is sold on November 27, 2019, for $1,500,000 a. Compute the amount of Aqua's recognized gain on the sale of the realty. b. Determine the amount of the recognized gain that is treated as $ 1231 gain and the amount that is treated as $ 1250 recapture due to $ 291...
22. Under a plan of complete liquidation, Cain Corporation distributes land (not a property) with an adjusted basis of $410,000 and an FMV of $300,000 for all Gary's stock. Gary's basis in his 10% interest in the Cain stock is $250.000. Find Gary's basis in the land and Cain Corporation's recognized gain or loss. A) Recognized Gain/Loss $110,000 loss Recognized Gain/Loss $110,000 loss Basis $300,000 B) Basis $250,000 C) Basis $300,000 D) Basis $250,000 Recognized Gain/Loss SO Recognized Gain/Loss SO...
Exercise 20-14 (LO. 1) Osprey Corporation stock is owned by Pedro and Pittro, who are unrelated. Pedro and Pittro each own 50% and Pittro owns 50% of the stock in the corporation. Osprey has the following assets (none of which were acquired in a § 351 or contribution to capital transaction) that are distributed in complete liquidation of the corporation Adjusted Fair Market Value Cash Land Equipment Basis $300,000 200,000 250,000 $300,000 440,000 140,000 Assume that Osprey Corporation distributes the...
Exercise 20-12 (LO. 1) Sunset Corporation, with E & P of $400,000, makes a cash distribution of $120,000 to a shareholder. The shareholder's basis in the Sunset stock involved is $50,000 a. Determine the tax consequences to the shareholder if the distribution is a nonqualified stock redemption The shareholder has dividend incomeof b. Determine the tax consequences to the shareholder if the distribution is a qualifying stock redemption The shareholder has a capital gain of c. Determine the tax consequences...
18. Identify which of the following statements is true. A) With limited exceptions, a loss can be recognized by a liquidating corporation when it makes a liquidating distribution of property that has declined in value. B) When computing the corporate-level gain on a liquidating distribution, the FMV of the property cannot exceed the liability assumed or acquired by the shareholder. C) The FMV of property distributed by a liquidating corporation can be less than the amount of the liability assumed...
Exercise 13-4 (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to Leilei, one of its shareholders, land worth $310,000; basis of the land to Fargo is $260,000. Determine the Federal income tax consequences of the distribution to Fargo. of $ 0 x . The net decrease to Fargo's E & P is $ 0 x . The Fargo Corporation recognizes a gain shareholder has dividend income of $ ox
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351, The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Fair Market Built in Gain Shareholder's Basis $300,000 $525,000 or (Loss) $375,000 $75,000 $400,000 ($125,000) ($50,000) Value Property 1 Property 2 Net built-in loss Martin adopts a plan of liquidation later in the year and...
Exercise 17-20 (LO. 1) Aqua Corporation purchases nonresidential real property on May 8, 2016, for $1,000,000. Straight-line cost recovery is taken in the amount of $89,765 before the property is sold on November 27, 2019, for $1,500,000 a. Compute the amount of Aqua's recognized gain on the sale of the realty. b. Determine the amount of the recognized gain that is treated as $ 1231 gain and the amount that is treated as $ 1250 recapture due to $ 291...
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