Old McDonald’s, Inc., a farm corporation, was incorporated as a C corporation on January 1, 1993. On January 1, 2015, the corporation made an election to be treated as an S corporation beginning in tax year 2015. At the time of the election, the corporation’s assets included 1,000 acres of unimproved farmland having a cost basis $2,250,000 and a fair market value of $7,000,000. A real estate developer has approached the shareholders with an offer to purchase the land in 2019 for a price of $10,000,000. What amount of sale would be taxed?
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Old McDonald’s, Inc., a farm corporation, was incorporated as a C corporation on January 1, 1993....
Question: Old McDonald’s, Inc., a farm corporation, was incorporated as a C corporation on January 1, 1993. On January 1, 2015, the corporation made an election to be treated as an S corporation beginning in tax year 2015. At the time of the election, the corporation’s assets included 1,000 acres of unimproved farmland having a cost basis $2,250,000 and a fair market value of $7,000,000. A real estate developer has approached the shareholders with an offer to purchase the land...
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2015 Sea-Breeze had the following assets and liabilities: Book Value Fair Value Current assets $ 150,000 $ 150,000 Land 200,000 200,000 Buildings (net) (6-year remaining life) 300,000 360,000 Equipment (net) (4-year remaining life) 300,000 280,000 Patent (10-year remaining life) 0...