C) None of the above.D) $230,000.E) $180,000.Correct Answer(s):EPoints Earned: 12.5/12.52.
Penguin Corporation purchased bonds (basis of $95,000) of its 100% owned subsidiary, Finch Corporation, at a discount. Pursuant to a § 332 liquidation and in satisfaction of the indebtedness,Finch distributes land worth $100,000 (basis of $110,000) to Penguin. Which of the following statements is correct with respect to the distribution of land?Continue
Points Earned: 12.5/12.53. Brenda owns 900 shares of Eagle Corporation stock at a time when Eagle has 1,500 shares of stock outstanding. The remaining shareholders are unrelated to Brenda. What is the minimum number of shares Eagle must redeem from Brenda so that the transaction will qualify as a disproportionate redemption?Points Earned: 12.5/12.54. Skylark Corporation owns 90% of the outstanding stock of Quail Corporation, having purchased the stock five years ago for $550,000. Pursuant to a plan of liquidation adopted by Quail Corporation on March 4, 2010, Quail distributes all its property on December 1, 2010, to its shareholders. Quail Corporation had never been insolvent and had E & P of $830,000 on the date of liquidation. Pursuant to the liquidation, Quail distributed property worth $690,000 (basis $580,000) to Skylark Corporation. How much gain must the parties recognize in 2010 on the transfer of this property to Skylark Corporation?
Points Earned: 12.5/12.55. The adjusted gross estate of Keith, decedent, is $5 million. Included in the gross estate is stock inGold Corporation (E & P of $900,000), a closely held corporation, valued at $1.8 million as of the date of Keith’s death in 2009. Keith had acquired the stock twelve years ago at a cost of $300,000. Death taxes and funeral and administration expenses for Keith’s estate are $900,000. Gold Corporation redeems one-half of the stock from Keith’s estate in a § 303 redemption to pay death taxes using property with a fair market value of $900,000 (adjusted basis of $550,000). Which of the following is a correct statement regarding the tax consequences of this redemption?A) The estate will recognize a $750,000 long-term capital gain on the redemption.B) The estate will have a basis of $900,000 in the property received from Gold Corporation in redemption of the estate’s stock.C) Gold Corporation will recognize no gain on the distribution of the property to Keith’s