CHAPTER 20--CORPORATIONS AN

Shrike corporation is liquidated and its assets are

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105.Shrike Corporation is liquidated and its assets are distributed to its 10 equal and unrelated individual shareholders. The assets distributed are as follows: Basis to Shrike Value When Corporation Distributed Marketable securities $400,000 $300,000 Land 600,000 800,000 One of the tax consequences of the liquidating distribution is: A. No gain or loss is recognized by Shrike Corporation. B. Shrike Corporation will recognize no loss on the securities, but must recognize a gain of $100,000 on the land. C. The shareholders will have a basis of $1,000,000 in the property they receive. D. The shareholders will have a basis of $1,100,000 in the property they receive. E. None of the above. 106.Ten years ago, Oro Corporation purchased all of the stock of Plata Corporation for $400,000. In the current year, Plata Corporation is liquidated, and all of its assets (basis of $900,000; fair market value of $1.5 million) are distributed to Oro Corporation. As a result of the liquidation, a tax consequence is: 107.On January 1, 2010, Silver Corporation (a calendar year S corporation for many years) became a C corporation. A possible reason for this change in status is: 13
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108.Which, if any, of the following transactions incurred by an S corporation is not a separately stated item? 109.Laurie is a 70% shareholder in Martin Ltd., a calendar year S corporation. As of January 1, 2010, Laurie’s basis in her stock investment was $400,000. During 2010, she made an additional capital contribution to Martin of $90,000 and also loaned the corporation $80,000. During 2010, Martin Ltd. had an operating loss of $900,000. One of the results of these transactions as to 2010 is that: A. Laurie can recognize a loss of $400,000. B. Laurie can recognize a loss of $490,000. C. Laurie can recognize a loss of $570,000. D. As of January 1, 2011, Laurie’s basis in her stock is a negative $60,000. E. None of the above.
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  • Spring '12
  • honig
  • Corporation, Income tax in the United States, C CORPORATION

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