C11-Chp-13-1E-Comparative liquidations

C11-Chp-13-1E-Comparative liquidations -...

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fe355b0b9bb932347212fe02fb25659daeee58ed.xls Page 1 of 2 They each take a distribution of half of the land and half of the after-tax cash If a partnership, Jan and Joe each have partner capital with basis of 14,000 and FMV of $35,000 Liquidating distribution is made on first day of year. Company has no other transaction. Assets Basis FMV This analysis is for Joe Cash $10,000 $10,000 who owns 50% of company. Land $20,000 $60,000 Total $30,000 $70,000 C Corp S Corp Ptship 1 Entity reports gain on entire distribution 2 Tax paid by entity on entire distribution Joe's Half 3. Joe's basis in entity before these transactions $14,000 $14,000 $14,000 4. Flow-through gain to Joe N/A N/A 5. Joe's basis in entity after gain on distribution 6. Land distributed to Joe (50% of land) Entity's Basis Land distributed to Joe (50% of land) FMV Cash distributed to Joe (his after-tax share) 7. Joe's Gain (Loss) on distribution 8. Joe's basis in land C Corporation (Distributions- Sec. 301, 311, 312(a),(b), 316, 317, 331, 334) 1 C Corporation distributes dividend of appreciated property --- treated as sold at FMV. 311 b 2 Distributing corporation pays tax on gain using regular corporate rates. 11 b 4 Corporate gains and losses do not flow-through to a C corporation shareholder. 5 Joe receives half of land (50% of $60,000), plus 50% of ($10,000 - $6,000). 6
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C11-Chp-13-1E-Comparative liquidations -...

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