Exam 6: Corporate Liquidating Distributions

The stock of Cooper Corporation is 70% owned by Carole and 30% owned by Carole's brother,Chris.During 2017,Chris transferred property (basis of $100,000 and FMV of $120,000)as a contribution to the capital of Cooper.During February 2018,Cooper adopted a plan of liquidation and subsequently made a pro rata distribution of the property back to Carole and Chris.At the time of the liquidation,the property had an FMV of $80,000.What amount of loss can be recognized by Cooper on the distribution of property?

Identify which of the following statements is true.

Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation.Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year.The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation.As a result of the liquidation,Parent must recognize a

Identify which of the following statements is true.

A subsidiary must recognize depreciation recapture income when the subsidiary is liquidated into the parent.

Under a plan of complete liquidation,Coast Corporation distributes land with a $300,000 adjusted basis and a $400,000 FMV to William,a 25% shareholder.William has a $200,000 basis in his Coast stock.The land is inventory in the hands of Coast Corporation.Coast Corporation must recognize

When a subsidiary corporation is liquidated into its parent corporation under a formal plan of liquidation,the distributions must take place within

Lake City Corporation owns all of the stock in Columbia Corporation.Pursuant to a plan of complete liquidation,Columbia distributes land having a $500,000 FMV and a $200,000 basis to Lake City.Lake City's basis in the land will be

When a liquidating corporation pays off an unsecured debt obligation,

Under a plan of complete liquidation,Key Corporation distributes land (not a disqualified property)with an adjusted basis of $410,000 and an FMV of $300,000 for all Sharon's stock.Sharon's basis in her 5% interest in the Key stock is $250,000.Find Sharon's basis in the land and Key Corporation's recognized gain or loss.

A plan of liquidation

Identify which of the following statements is false.

Carly owns 25% of Base Corporation's single class of stock and Premier Corporation owns the remaining 75%.Carly's basis in the Base stock is $200,000 and Premier Corporation's basis in the Base stock is $600,000.Carly receives property with a $175,000 adjusted basis and a $250,000 FMV and Premier Corporation receives property with a $600,000 adjusted basis and a $750,000 FMV in complete liquidation of Base Corporation.All of Base's cash is used to pay its liabilities.Which of following statements is correct concerning the tax effects of the liquidation?

Last year,Toby made a capital contribution of a pretzel maker having a $2,000 adjusted basis and a $200 FMV to Keke Corporation in exchange for additional stock.This year,Keke Corporation adopted a plan of liquidation.Prior to the adoption of the liquidation plan,Keke had not used the pretzel maker in connection with the conduct of its trade or business.Which of the following statements is true?

Why should a corporation that is 100% owned by another corporation be treated differently when it liquidates than a corporation that is 100% owned by an individual?