mid term - 1. Glenda is the sole shareholder of Condor...

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1. Glenda is the sole shareholder of Condor Corporation. She sold her stock to Melissa on October 31 for $150,000. Glenda’s basis in Condor stock was $50,000 at the start of the year. Condor distributed land to Glenda immediately before the sale. Condor’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Melissa received a $75,000 cash distribution from Condor. During the year, Condor has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? Answer a. b. c. d. e. Question 2 Question 2 1. The gross estate of April, decedent, includes stock in Brown Corporation and Parrot Corporation valued at $700,000 and $1.3 million, respectively. April’s adjusted gross estate is $5 million. At the time of her death in 2009, April owned 24% of the Brown stock and 40% of the Parrot stock. Immediate members of April’s family own the remaining shares of both Brown and Parrot. Those individuals are also the sole beneficiaries of April’s estate. Death taxes and funeral and administration expenses for April’s estate are $700,000. April had a basis of $130,000 in the Brown stock and $290,000 in the Parrot stock. Brown Corporation (E & P of $900,000) distributed land worth $700,000 (basis of $650,000) to April’s estate in redemption of all of the Brown stock. Which of the following is a correct statement regarding the tax consequences of this redemption?
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Answer Question 3 Question 3 1. Ten years ago, Connie purchased 4,000 shares in Platinum Corporation for $40,000. In the current year, Connie receives a nontaxable stock dividend of 40 shares of Platinum preferred. Values at the time of the dividend are: $8,000 for the preferred stock and $72,000 for the common. Based on this information, Connie’s basis is: Answer Question 4 Question 4 1. Goose Corporation makes a property distribution to its sole shareholder, Michael. The
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property distributed is a hunting cabin (fair market value of $270,000; basis of $220,000) that is subject to a $350,000 mortgage which Michael assumes. Before considering the consequences of the distribution, Goose’s current E & P is $50,000 and its accumulated E & P is 200,000. Goose makes no other distributions during the current year. What is Goose’s taxable gain on the distribution of the cabin? Answer Question 5 Question 5 1. Blue Corporation, a cash basis taxpayer, has taxable income of $700,000 for the current year. Blue elected $80,000 of § 179 expense. It also had a related party loss of $30,000 and a realized (not recognized) gain from an involuntary conversion of $85,000. It paid Federal income tax of $185,000 and a nondeductible fine of $20,000. Blue’s current E & P is: Answer Question 6 Question 6 1. The stock in Lark Corporation is owned equally by Olaf and his son Pete. In a liquidation of
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This note was uploaded on 04/01/2011 for the course ACCT 360 taught by Professor Mill during the Spring '11 term at Davenport.

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mid term - 1. Glenda is the sole shareholder of Condor...

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