CHAPTER6 tax problem-4302 - CHAPTER 6 SUPPLEMENTAL HANDOUT C CORPORATION TAXATION PROBLEMS 1 Robin Corporation was organized eight(8 years ago to

CHAPTER6 tax problem-4302 - CHAPTER 6 SUPPLEMENTAL HANDOUT...

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CHAPTER 6 SUPPLEMENTAL HANDOUT C CORPORATION TAXATION PROBLEMS 1.Robin Corporation was organized eight (8) years ago to construct family dwellings. Six (6) yearsago, Robin Corporation also began selling furniture. Because of a glut in the real estate market,Robin Corporation discontinues its construction business in the current year. Robin Corporation sellsall the assets used in the construction business for $4,000,000 and distributes the sales proceedsequally to its two (2) equal shareholders, Viola (an individual) and Forrow Corporation, in theredemption of one-half (1/2) of their stock. Viola has a basis of $110,000 in her redeemed stock andForrow Corporation has a basis of $200,000 in its redeemed stock. Robin Corporation has EarningsAnd Profits (E&P) of $7,000,000 as of the date of the distribution. Determine the income taxconsequences of the redemption to Viola, Forrow Corporation and Robin Corporation.2.Minthu owns all one hundred (100) shares of the outstanding stock of Yim Corporation. YimCorporation has Earnings And Profits (E&P) of $800,000. Minthu acquired her stock in YimCorporation ten (10) years ago for $60,000. Yim Corporation has several trades or businesses that ithas developed and operated for more than five (5) years. In the current year, Yim Corporation sellsone (1) of those trades or businesses and, in a transaction qualifying as a Partial Liquidation OfShareholder's Interest Redemption (under Section 302(b)(4)), redeems twenty (20) shares ofMinthu's stock for $300,000. Determine the income tax consequences of the redemption to Minthuand Yim Corporation.3. The gross estate of Fortune, decedent, includes stock in Denee Corporation (Earnings And Profits(E&P) of $700,000) and Lila Corporation valued at $150,000 and $250,000, respectively.Fortune owned thirty percent (30%) of the Denee Corporation stock and sixty percent (60%) ofthe Lila Corporation stock.
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