2014CompTopics16 - CCH Federal Taxation Comprehensive Topics 2014 1 A corporation generally recognizes gains and losses on sales of property during a

2014CompTopics16 - CCH Federal Taxation Comprehensive...

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CCH Federal Taxation Comprehensive Topics 2014 1. A corporation generally recognizes gains and losses on sales of property during a complete liquidation. *a. Trueb. False 2. A corporation generally does notrecognize loss on the distribution of property whose basis exceeds its fair market value. 3. Earnings and profits generally are extinguished as the result of a complete liquidation. 4. To receive a fair market value basis in the assets of a purchased subsidiary, the parent corporation must liquidate the subsidiary. 5. Under Code Sec. 331, the shareholder will always recognize a capital gain or a capital loss on the stock upon receipt of a liquidating distribution. a. True*b. False 6. If a parent corporation receives a basis in the assets of a subsidiary under Code Sec. 334(b)(1), the subsidiary must recognize gain as the result of depreciation recapture. 7. A shareholder who recognizes gain or loss under Code Sec. 331 will receive a fair market value basis in assets received as part of the liquidating distribution.
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8. A corporation may elect not to recognize gain on the sale of its stock in a subsidiary. 9. Code Sec. 337 applies only to subsidiary corporations. *a. Trueb. False 10. A Code Sec. 338 election is irrevocable. 11. If a shareholder assumes a liability on property in a liquidating distribution, the amount of assumed liability always affects the amount of gain recognized by the liquidating corporation. 12. The liquidating corporation must file a separate Form 1099-DIV for each shareholder that receives a liquidating distribution of $600 or more during a calendar year. 13. A liquidating distribution may be treated as a dividend to shareholders if the liquidating corporation has accumulated earnings and profits. a. True*b. False 14. If a shareholder receives more than a proportionate share of the assets of a liquidating corporation, the excess is treated as a payment received that is attributable to those shareholders who receive less than their proportionate share.
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15. A liquidating corporation may recognize gain or loss on the distribution of installment obligations to shareholders. 16. Code Sec. 331 has no application to a distribution in satisfaction of bona fide corporate indebtedness to a shareholder.
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  • Fall '14
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  • fair market value, Sue Sugarman

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