Chapter 20 Quiz - Taxation II Fall 2011 Chapter 20Take-Home...

Chapter 20 Quiz
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Taxation II Fall 2011 Chapter 20Take-Home Quiz Student:_______________________________________________________________________ 1. Shareholders who receive cash distributions as a part of a corporate reorganization always treat the amount received as capital gains. a. True b. False 2. The stock in Palm Corporation is held equally by two brothers. One year before its liquidation, the shareholders transfer property (basis of $350,000, fair market value of $200,000) to Palm Corporation in return for stock. In a current year liquidation, Palm Corporation transfers the property (now worth $150,000) pro rata to the brothers. What amount of loss will Palm Corporation recognize on the distribution? a. $0 b. $50,000 c. $150,000 d. $200,000 e. None of the above 3. Fir Corporation distributes all of its property in a complete liquidation. Debbie, a shareholder, receives $8,000 cash and securities having a fair market value of $32,000. The securities had been acquired three years ago by Fir as an investment for $24,000. Debbie has a $38,000 basis in her Fir stock. What is Debbie's basis in the securities received in the liquidation of Fir? a. $32,000 b. $38,000 c. $24,000 d. $0 e. None of the above 4. During the current year, Neptune Corporation is liquidated and distributes its only asset,
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