Question

1. A liquidation must be reported to the Internal Revenue Service on Form 966

A within 60 days of the adoption of a plan of liquidation.

B) that is filed with the national IRS office.

C) whether the shareholders' realized gain is recognized or not.

D) by the shareholders.

2. Andi Corporation transfers assets with an adjusted basis of $200,000 and an FMV of $300,000 to Bella Corporation in exchange for $300,000 of Bella Corporation stock as part of a tax-free reorganization. The Bella stock had been purchased from its shareholders one year earlier for $250,000. How much gain do Andi and Bella Corporations recognize on the asset transfer?    

A)

Andi	Bella
$0	$0

B)

Andi	Bella
$0	$50,000

C)

Andi	Bella
$100,000	$0

D)

Andi	Bella
$100,000	$50,000

Answer 1

1.

• A corporation (or a farmer’s cooperative) must file Form 966 if it adopts a resolution or plan to dissolve the corporation or liquidate any of its stock.
• File Form 966 within 30 days after the resolution or plan is adopted to dissolve the corporation or liquidate any of its stock. If the resolution or plan is amended or supplemented after Form 966 is filed, file another Form 966 within 30 days after the amendment or supplement is adopted.
• File Form 966 with the Internal Revenue Service Center at the address where the corporation (or cooperative) files its income tax return.
• A corporation must recognize gain or loss on the distribution of its assets in the complete liquidation of its stock.

2. Andi would gain $100,000 & Bella would gain $50,000