In liquidation gray distributes the land to jane at

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Income Tax Fundamentals 2020
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Chapter 11 / Exercise 10
Income Tax Fundamentals 2020
Altus-Buller/Whittenburg
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basis of $20,000 and fair market value of $100,000. In liquidation, Gray distributes the land to Jane. At the time of the liquidation, the land is worth $110,000.a.How much loss, if any, may Gray Corporation recognize on the distribution of the land to Jane?b.Assume that the transfer of land to Gray Corporation was made so that the corporation could subdivide the land and build residential housing. However, a subsequent deterioration of the housing market forced Gray Corporation to abandon its plans. What amount of loss may Gray Corporation recognize on the distribution of the land to Jane?
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Income Tax Fundamentals 2020
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Chapter 11 / Exercise 10
Income Tax Fundamentals 2020
Altus-Buller/Whittenburg
Expert Verified
103. After a complete liquidation has been adopted, Wren Corporation sells its only asset, unimproved land (basis of $200,000) held as an investment. The land is sold to Seth (an unrelated party) for $500,000. Under the terms of the sale, Wren Corporation receives cash of $50,000 and Seth’s notes for the balance of $450,000. The notes are payable over the succeeding 5 years ($90,000 per year) and carry an appropriate rate of interest. Immediately after the sale, Wren Corporation distributes the cash and notes to Adam, the sole shareholder of Wren. Adam has an adjusted basis of $80,000 in the Wren stock. The installment notes have a value equal to their face amount of $450,000.a.How will Wren Corporation be taxed on the distribution?b.How will Adam be taxed on his receipt of the cash and notes?104. The stock of Tan Corporation (E & P of $1.5 million) is owned as follows: 90% by Egret Corporation (basis of $900,000), and 10% by Zoe (basis of $70,000). Both shareholders acquired their shares in Tan more than six years ago. In the current year, Tan Corporation liquidates and distributes land (fair market value of $1.1 million, basis of $1.3 million) and equipment (fair market value of $700,000, basis of $410,000) to Egret Corporation, and securities (fair market value of $200,000, basis of $260,000) to Zoe. What are the tax consequences of these distributions to Egret, to Tan, and to Zoe?
105. On March 16, 2012, Blue Corporation purchased 10% of the Gold Corporation stock outstanding. Blue Corporation purchased an additional 40% of the stock in Gold on October 24, 2012, and an additional 25% on April 4, 2013. On July 23, 2013, Blue Corporation purchased the remaining 25% of Gold Corporation stock outstanding.a.For purposes of the § 338 election, on what date does a qualified stock purchase occur?b.What is the due date for making the § 338 election?106. Do noncorporate and corporate shareholders typically have the same preference for the tax treatment of a stock redemption? Explain. 107. Explain the stock attribution rules that apply in the case of stock redemptions.
108. When does a redemption qualify as a not essentially equivalent redemption under § 302(b)(1)? 109. What are the requirements that must be satisfied for a distribution to qualify under § 302(b)(2) as a disproportionate redemption? 110. Explain the requirements for the termination of a business test for purposes of a partial liquidation. Why isthis test generally preferable over the genuine contraction of a corporate business test for qualifying a distribution as a partial liquidation?

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