C12-Chp-07-2-Homework-Prb-Reorganizations-2012 -...

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74dc6295b6b52dc8c92294cb84ad548c805d745c.doc. Page 1 of 5 First Name Last Name: Home work-Chapter 7. Turn in one copy of your solutions at the start of class. (35 @ 3 Pts. = 105) This homework has been updated for Spring 2011. 1 [Pg. 7-18] Mecklenburg owns all of the stock of Charlotte Corporation. Both corporations have been active in business for 20 years. Mecklenburg distributes all of its Charlotte stock to the Mecklenburg stockholders. Those stockholders do not surrender any of their Mecklenburg stock. This is a: a. spin-off b. split-off c. split-up 2 [Pg. 7-18] Mecklenburg Corporation organized Charlotte Corporation and Pineville Corporation, and invested its assets in these two subsidiaries. Mecklenburg distributed all of its Charlotte stock and Pineville Corporation stock to the Mecklenburg stockholders. Those stockholders surrendered their Mecklenburg stock. This was a: a. spin-off b. split-off c. split-up 3 Jon owns Local Corporation with the following balance sheet. Jon organized the Local Corporation and it has always been a C corporation. Local Corp. Balance Sheet as of 12-31-10 Book Value Market Value Cash $ 500,000 $ 500,000 Receivables 100,000 100,000 Fixed Assets 400,000 1,400,000 Total Assets $ 1,000,000 $ 2,000,000 Common Stock Par value per share $10 Number of shares issued to Jon 10,000 Issue Price per share $30 Total Proceeds from stock issue to Jon $ 300,000 Common Stock 100,000 Additional Paid in Capital 200,000 700,000 Total Owner Equity of Jon $ 1,000,000 $ 2,000,000 Huge Corporation acquires Jon’s stock on 12-31-10 by paying cash of $2,000,000. Local will be operated as a subsidiary. No special election under Section 338 is made related to this acquisition. After the acquisition, what is the basis of the fixed assets to Local Corporation? a. $400,000 b. $1,900,000 c. none of these 4 [Pg. 7-10+, §368(a)(1)] In a type B reorganization, as defined by the Internal Revenue Code, the I. Stock of the target corporation is acquired solely for the voting stock of either the acquiring corporation or its parent. II. Acquiring corporation must have control of the target corporation immediately after the acquisition. a. I only. b. II only. c. Both I and II d. Neither I nor II 5 [Pg. 7-4, §368(a)(1)] Which one of the following is not a corporate reorganization as defined in the Internal Revenue Code? a. Stock redemption. b. Recapitalization c. Mere change in identity. d. Statutory merger.
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74dc6295b6b52dc8c92294cb84ad548c805d745c.doc. Page 2 of 5 6 [Pg. 7-10+, §368(a)(1)] Jaxson Corp . has 200,000 shares of voting common stock issued and outstanding. King Corp . has decided to acquire 90 percent of Jaxson's voting common stock solely in exchange for 50 percent of its voting common stock and retain Jaxson as a subsidiary after the transaction. Which of these statements is true? a.
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This note was uploaded on 03/09/2012 for the course ACCT 6120 taught by Professor Godfrey,h during the Spring '08 term at UNC Charlotte.

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C12-Chp-07-2-Homework-Prb-Reorganizations-2012 -...

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