Identify which of the following statements is true. A. Two corporations are considered to be brother−sister...
Identify which of the following statements is true.
A. Two corporations are considered to be brother−sister corporations for purposes of the Sec. 304 redemption rules if one shareholder owns more than 50% of each corporation.
B.
The distribution of preferred stock as a stock dividend will result in income or a taxable gain being recognized by the shareholder on the date of the distribution if the stock is Sec. 306 stock.
C.
Corporations without E&P can distribute preferred stock as a stock dividend that is Sec. 306 stock.
D.
All of the above are false.
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Identify which of the following statements is true.
A. Two corporations are considered to be brother−sister...
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....
Identify which of the following statements is false. A) Brown Corporation owns 60% of Clark Corporation...
Identify which of the following statements is false. A) Brown Corporation owns 60% of Clark Corporation and 65% of Davis Corporation. Davis Corporation owns 10% of Clark Corporation, and Clark Corporation owns 10% of Davis Corporation. The remaining stock is owned by an individual shareholder. Brown, Davis, and Clark Corporations are a parent-subsidiary controlled group. B) There are three categories of control groups: parent-subsidiary, brother-sister, and combined. C) The controlled group test is applied on December 31. D) A controlled...
26. Identify which of the following statements is true. A) A liquidating distribution of property other...
26. Identify which of the following statements is true. A) A liquidating distribution of property other than a disqualified property that is made ratably to all shareholders (based on their stockholdings) will permit the recognition of loss on the portion of the distribution that is made to a related person. B) A subsidiary corporation can recognize losses on distributions to either the parent corporation or minority shareholders in a Sec. 332 liquidation. C) Section 336 prevents recognition of a loss...
Thanks for your HELP!!! : ) 23. Identify which of the following statements is true. A)...
Thanks for your HELP!!! : ) 23. Identify which of the following statements is true. A) In general, a noncorporate shareholder that receives a distribution in complete liquidation of the liquidating corporation recognizes his or her entire realized gain as a capital gain. B) The basis for nonmoney property received by a noncorporate shareholder as part of a liquidating distribution is the same as its basis on the books of the liquidating corporation. C) The liquidating corporation does not recognize...
. 1. Identify which of the following statements is true: C Corporation operating losses are deductible...
. 1. Identify which of the following statements is true: C Corporation operating losses are deductible by the individual shareholders S Corporation operating losses are never deductible by the individual shareholders. If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur. 2. The adjusted basis of...
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...
Tax Drill - Disproportionate Redemption Complete the following statements regarding disproportionate redemptions. A stock redemption qualifies...
Tax Drill - Disproportionate Redemption Complete the following statements regarding disproportionate redemptions. A stock redemption qualifies for sale or exchange treatment under $ 302(b)(2) as a disproportionate redemption if the following conditions are met: % of the interest owned in the corporation before the • After the distribution, the shareholder owns less than redemption . After the distribution, the shareholder owns less than entitled to vote. % of the total combined voting power of all dasses of stock Tax Drill...
Flintstone Company is owned equally by Fred Stone and his sister Wilma, each of whom hold...
Flintstone Company is owned equally by Fred Stone and his sister Wilma, each of whom hold 1,800 shares in the company. Wilma wants to reduce her ownership in the company, and it was decided that the company will redeem 460 of her shares for $29,900 per share on December 31 of this year. Wilma’s income tax basis in each share is $8,300. Flintstone has current E&P of $10,620,000 and accumulated E&P of $50,040,000. a. What is the amount and character...
Question 26 The dividends-received deduction is designed to reduce double taxation of corporate dividends payable to...
Question 26 The dividends-received deduction is designed to reduce double taxation of corporate dividends payable to individual shareholders. True False Henry transfers property with an adjusted basis of $90,000 and an FMV of $100,000 to a newly-formed corporation in a Sec. 351 exchange. Henry receives stock with an FMV of $80,000 and a short-term note with a $20,000 FMV. Henry's recognized gain is $0. $5,000 $20,000 $10,000 Sun and Moon Corporations each have only one class of stock outstanding. Their...
(18) Which of the following statements is incorrect regarding tax me rollowing statements is incorrect regarding...
(18) Which of the following statements is incorrect regarding tax me rollowing statements is incorrect regarding tax planning opportunities for qualifying stock redemptions? 4. A corporation that uses installment obligations to finance a redemption can deduct the related interest expense, D. With a "bootstrap acquisition," a third party first acquires a small amount of a corporation's stock, and then the corporation redeems the remaining stock of the other shareholders. c. For the shareholders of a family-owned corporation, the disproportionate redemption...
26. Identify which of the following statements is true. A) A liquidating distribution of property other than a disqualified property that is made ratably to all shareholders (based on their stockholdings) will permit the recognition of loss on the portion of the distribution that is made to a related person. B) A subsidiary corporation can recognize losses on distributions to either the parent corporation or minority shareholders in a Sec. 332 liquidation. C) Section 336 prevents recognition of a loss...
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...
Tax Drill - Disproportionate Redemption Complete the following statements regarding disproportionate redemptions. A stock redemption qualifies for sale or exchange treatment under $ 302(b)(2) as a disproportionate redemption if the following conditions are met: % of the interest owned in the corporation before the • After the distribution, the shareholder owns less than redemption . After the distribution, the shareholder owns less than entitled to vote. % of the total combined voting power of all dasses of stock Tax Drill...
Question 26 The dividends-received deduction is designed to reduce double taxation of corporate dividends payable to individual shareholders. True False Henry transfers property with an adjusted basis of $90,000 and an FMV of $100,000 to a newly-formed corporation in a Sec. 351 exchange. Henry receives stock with an FMV of $80,000 and a short-term note with a $20,000 FMV. Henry's recognized gain is $0. $5,000 $20,000 $10,000 Sun and Moon Corporations each have only one class of stock outstanding. Their...
(18) Which of the following statements is incorrect regarding tax me rollowing statements is incorrect regarding tax planning opportunities for qualifying stock redemptions? 4. A corporation that uses installment obligations to finance a redemption can deduct the related interest expense, D. With a "bootstrap acquisition," a third party first acquires a small amount of a corporation's stock, and then the corporation redeems the remaining stock of the other shareholders. c. For the shareholders of a family-owned corporation, the disproportionate redemption...
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