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6-38 - $180,000(d Teal Taxable Gain = FMV – Basis =...

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ACCT 467 Kristen Jack Chapter 6 – Problem 38 2/21/2012 E&P = $1,900,000 Distribution (Property) Basis = $180,000 FMV = $250,000 Grace (shareholder) 28% (a) Grace Taxable Dividend & Basis in Property = FMV = $250,000 Teal Taxable Gain = FMV – Basis = 250,000 – 180,000 = $70,000 (b) Teal Taxable Gain = FMV – Basis = 250,000 – 180,000 = $70,000 Grace Corporation Dividend Income & Basis in Stock = FMV = $250,000 Taxed = 20% * 250,000 = $50,000 (c) Teal Taxable Gain = FMV – Basis = 250,000 – 180,000 = $70,000 Grace Basis in Property = 250,000 Grace Capital Gain = FMV – Basis in Stock = 250,000 – 70,000 =
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Unformatted text preview: $180,000 (d) Teal Taxable Gain = FMV – Basis = 250,000 – 180,000 = $70,000 Grace Basis in Property = 250,000 Grace Corporation Capital Gain = FMV – Basis in Stock = 250,000 – 70,000 = $180,000 (e) Teal Corporation would be fine with any option because they are all the same. Grace would want to choose (c) because of the quantifying stock redemption (which she would receive as an individual, rather than as a corporation). She will have a gain of $180,000....
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