ZuoTi.Pro
Question

Exercise 20-12 (LO. 1) Sunset Corporation, with E & P of $400,000, makes a cash distribution of $120,000 to a shareholder. The shareholders 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 to the shareholder if the distribution is pursuant to a complete liquidation of Sunset. The shareholder has a capital gain of $

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Given cash distibu - Sunel stock involved a)lei cske hold, Conseayuen cesto ond Polits of 400, 000Te cora ion hes 2b1b oo e Shase hour hvin, a basic n -th. poration of hhich o worth dis tri buhon wnde to the share holdwith u c..太 心sp«. e. 1Yea The basis lk be a addedto th bais 6 stock hel./ by the shere holdey ther,he λμ sh, e hoWri.sentitled for tu divdaj income hhichDe tcrmine han the Consevencesof -hu distri buhion me stock ill have to be less hnt Slock bauis - $ 12o 000- Conseavvences ue Se holdy Delcmine dishibhon Sua to ompl k n a Comple Co nsaumu meut SincofCop in- Capils 2oi000 Hune oioo uhich xible

0 0
Add a comment
Know the answer?
Add Answer to:
Exercise 20-12 (LO. 1) Sunset Corporation, with E & P of $400,000, makes a cash distribution...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Question 1 Which of the following is an incorrect statement regarding the tax consequences of a...

    Question 1 Which of the following is an incorrect statement regarding the tax consequences of a § 306 stock disposition? In a sale of § 306 stock, the shareholder generally recognizes ordinary income equal to the fair market value of the preferred stock on the date it was acquired in the stock dividend. No loss is recognized on a sale of § 306 stock. The issuing corporation’s E & P is not reduced by a sale of § 306 stock....

  • To carry out a qualifying stock redemption, Turaco Corporation (E & P of $800,000) transfers land...

    To carry out a qualifying stock redemption, Turaco Corporation (E & P of $800,000) transfers land held for investment purposes to Aida, a shareholder. The land had a basis of $250,000, a fair market value of $400,000, and is subject to a $300,000 liability. Aida has a basis of $70,000 in the shares redeemed. Which of the following is a correct statement regarding the tax consequences of this redemption? a. Aida will have $400,000 of dividend income. b. Aida will...

  • Problem 20-23 (LO. 1,4) Dove Corporation (E & P of $800,000) has 1,000 shares of stock...

    Problem 20-23 (LO. 1,4) Dove Corporation (E & P of $800,000) has 1,000 shares of stock outstanding. The shares are owned as follows: Julia, 600 shares; Maxine (Julia's sister), 300 shares; and Janine (Julia's daughter), 100 shares. Dove Corporation owns land (basis of $300,000, fair market value of $260,000) that it purchased as an investment seven years ago. Dove distributes the land to Julia in exchange for all of her shares in the corporation. Julia had a basis of $275,000...

  • 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 20-13 (LO. 1) Pursuant to a complete liquidation, Carrot Corporation distributes to its shareholders real...

    Exercise 20-13 (LO. 1) Pursuant to a complete liquidation, Carrot Corporation distributes to its shareholders real estate held as an investment (basis of $650,000, fair market value of $880,000) a. Determine the gain or loss recognized by Carrot on the distribution if no liability is involved. If no liability is involved, Carrot has a gain of $ on the distribution b. Determine the gain or loss recognized by Carrot on the distribution if the real estate is subject to a...

  • 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 13-4 (Algorithmic) (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes...

    Exercise 13-4 (Algorithmic) (LO. 5) Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to Leilei, one of its shareholders, land worth $1,760,640; basis of the land to Fargo is $1,467,200. Determine the Federal income tax consequences of the distribution to Fargo. . The net to Fargo's E & P is $ Fargo Corporation recognizes a of $ The shareholder has dividend income of $

  • Exercise 20-16 (LO. 1) Green Corporation's assets are valued at $920,000 after payment of all corporate...

    Exercise 20-16 (LO. 1) Green Corporation's assets are valued at $920,000 after payment of all corporate debts, except for $134,000 of taxes payable on net gains it recognized on the liquidation. Bruno, an individual and the sole shareholder of Green, has a basis of $280,000 in his stock. Compute the gain or loss recognized by Bruno on the liquidation of Green Corporation Bruno has a recognized gain of $ as a result of the liquidation. Feedback Check My Work The...

  • Exercise 19-21 (Algorithmic) (LO. 1) At the beginning of the year, Myrna Corporation (a calendar year...

    Exercise 19-21 (Algorithmic) (LO. 1) At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P of $53,400. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $80,100 to its sole shareholder, Abby, whose stock basis is $16,020. How is the distribution treated for tax purposes? If an amount is zero, enter "O" As a result the distribution Abby has the following: Dividend income: $ Return of...

  • Longhorn Company reports current E&P of $130,000 in 20X3 and accumulated E&P at the beginning of...

    Longhorn Company reports current E&P of $130,000 in 20X3 and accumulated E&P at the beginning of the year of negative $260,000. Longhorn distributed $390,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in Longhorn is $130,000. How is the distribution treated by the shareholder in 20X3? Multiple Choice $130,000 dividend. $130,000 dividend, $130,000 tax-free return of basis, and $130,000 capital gain. $130,000 dividend and $260,000 tax-free return of basis. $0 dividend, $130,000 tax-free...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT