Question

38. Navatek Cor avatek Corporation adopts a plan of reorganization and exchanges 1,500 shares of its voting and $75,000 in cash for Santos Corporation's assets having a $300,000 adjusted basis and a $375,000 FMV. Santos Corporation is subsequently liquidated. What is Navatek Corporation's basis in the assets acquired in the exchange? A) $225,000 B) $250,000 C) $300,000 D) $375,000 Page Ref: C: 7-16. (Slide 7-11). 39. Identify which of the following statements is false. A) In a Type C reorganization, the acquired corporation must distribute stock, securities, and other property it receives to its shareholders. B) A Type C reorganization is less flexible than a Type A reorganization because of the solely- for-voting stock requirement of a Type C. C) To qualify as a Type C reorganization, the target corporation must be formally dissolved. D) In a Type C reorganization, shareholders of the acquiring corporation generally do not have to approve the acquisition. Page Ref: C: 7-26. (Slide 32). 40. Which of the following corporations is an includible corporation for purposes of filing a consolidated tax return? A) insurance companies B) S corporations C) car manufacturing corporation D) foreign corporations 41. Identify which of the following statements is true. A) Corporations that join in a consolidated return must adopt the same tax year as the parent corporation. B) Permission to discontinue the filing of consolidated tax returns is sometimes granted by the IRS. C) Additional administrative costs may be incurred when filing a consolidated tax return. D) All of the above are true.

Answer 1

38 ., Option C , 300,000 [ Adjusted basis of $300,000 is the basis for exchange]

39. Option C, to qualify as a Type C reorganization, the target corporation must be formally dissolved.

40. Option C, car manufacturing corporation

41. Option D, all of the above are true.