Fact Pattern:Lind and Post organized Ace Corp., which issued voting common stock with a fair market value of $120,000. They each transferred property in exchange for stock as follows: AdjustedPercentage ofPropertyBasisFair Market ValueAce Stock AcquiredLindBuilding $40,000$82,00060%PostLand$ 5,000$48,00040%The building was subject to a $10,000 mortgage that was assumed by Ace.What was Ace’s basis in the building?
. On January 1, Year 1, Pearl Corporation owned 90% of the outstanding stock of Seso Corporation. Both companies were domestic corporations. Pursuant to a plan of liquidation adopted by Seso in March Year 1, Seso distributed all of its property in September Year 1 in complete redemption of all its stock, when Seso’s accumulated earnings equaled $18,000. Seso had never been insolvent. Pursuant to the liquidation, Seso transferred to Pearl a parcel of land with a basis of $10,000 and a fair market value of $40,000. How much gain must Seso recognize in Year 1 on the transfer of this land to Pearl? This answer is correct .
5.The redemption must be part of a plan.6.The shareholder may be a corporation.7.The redemption may be pro rata.8.The distribution may not be made in the year after the plan was adopted. .
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- Fall '17
- Dan Ward
- Accounting, fair market value