2014CompTopics16 - CCH Federal Taxation Comprehensive...

CCH Federal Taxation
Comprehensive Topics
2014
1. A corporation generally recognizes gains and losses on sales of
property during a complete liquidation.
*a. True
b. False
2. A corporation generally does not recognize 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.

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. True
b. 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.

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.