Question 1

Tax attributes of the target corporation are lost when a Sec. 338 deemed liquidation election is made.

Accepted Answer

A) True 
 B)False

Question 2

Identify which of the following statements is true.

Accepted Answer

A)  Corporate purchasers generally prefer Sec. 338 treatment because of the significant tax savings originating from the step- up in basis. 
B)  The Sec. 338 deemed liquidation rules require that 100% of the target corporation's stock be purchased. 
C)  A deemed liquidation election is available when a target corporation is liquidated into its parent corporation. 
D)  All of the above are false. 
A)  Corporate purchasers generally prefer Sec. 338 treatment because of the significant tax savings originating from the step- up in basis. 
B)  The Sec. 338 deemed liquidation rules require that 100% of the target corporation's stock be purchased. 
C)  A deemed liquidation election is available when a target corporation is liquidated into its parent corporation. 
D)  All of the above are false.

Question 3

Paper Corporation adopts a plan of reorganization and exchanges 1,000 shares of its voting stock and $50,000 in cash for Chase Corporation's assets having a $200,000 adjusted basis and a $275,000 FMV. Chase Corporation is subsequently liquidated. What is Paper Corporation's basis in the assets acquired in the exchange?
A) $200,000
B) $275,000
C) $250,000
D) $50,000

Accepted Answer

The answer of Paper Corporation adopts a plan of reorganization...

Question 4

Type A reorganizations include mergers and consolidations.

Accepted Answer

A) True 
 B)False

Question 5

Acquiring Corporation acquires at the close of business on June 30 (of a nonleap year) all of the stock of Target Corporation as part of a merger transaction. Target Corporation is liquidated into Acquiring Corporation on the same day as part of the merger. Acquiring obtains assets having a $600,000 FMV and a $275,000 adjusted basis, along with a $100,000 net operating loss. Acquiring Corporation reports taxable income of $146,000 for the year. What amount of Target Corporation's NOL can be used to offset Acquiring Corporation's taxable income? (Assume all months have 30 days and ignore the Sec. 382 limitation rules.)

Accepted Answer

The lesser of Target's NOL carryover ($1

Question 6

On July 1, in connection with a recapitalization of Yorktown Corporation, Robert Moore exchanges 1,000 shares of Yorktown preferred stock, which cost him $95,000, for 1,000 shares of Yorktown common stock worth
$108,000 and bonds having a principal amount of $10,000 and an FMV of $10,500. What is the amount of Moore's realized and recognized gain?

Accepted Answer

The answer of On July 1, in connection with a...

Question 7

Identify which of the following statements is true.

Accepted Answer

A)  A Type B reorganization must be accomplished in one transaction. 
B)  Boxer Corporation acquires 81% of Excel Corporation's stock in a Type B reorganization. When Boxer Corporation acquires an additional 11% of Excel Corporation's stock two years later in exchange for Boxer stock, the second acquisition is also treated as a Type B reorganization. 
C)  "Creeping acquisitions" are not allowed in a Type B reorganization. 
D)  All of the above are false. 
A)  A Type B reorganization must be accomplished in one transaction. 
B)  Boxer Corporation acquires 81% of Excel Corporation's stock in a Type B reorganization. When Boxer Corporation acquires an additional 11% of Excel Corporation's stock two years later in exchange for Boxer stock, the second acquisition is also treated as a Type B reorganization. 
C)  "Creeping acquisitions" are not allowed in a Type B reorganization. 
D)  All of the above are false.

Question 8

Gulf Corporation wants to acquire all of Beamer Corporation's assets and liabilities in a Type C reorganization. The FMV of Beamer's assets is $500,000. Beamer's liabilities are $70,000. How much cash can Gulf Corporation use to pay for Beamer's assets without violating the Type C reorganization requirements?

Accepted Answer

0.20 × $500,000 = $100,000 noncash consi

Question 9

Identify which of the following statements is true.

Accepted Answer

A)  The residual method ensures that any premium paid for the target stock is reflected in depreciable assets. 
B)  The allocation of the total basis of the target corporation's assets to the individual assets following a Sec. 338 election occurs under the residual method. 
C)  The total basis of the target corporation's assets following a Sec. 338 election in general equals the amount paid for the target corporation's stock minus the target corporation's liabilities. 
D)  All of the above are false. 
A)  The residual method ensures that any premium paid for the target stock is reflected in depreciable assets. 
B)  The allocation of the total basis of the target corporation's assets to the individual assets following a Sec. 338 election occurs under the residual method. 
C)  The total basis of the target corporation's assets following a Sec. 338 election in general equals the amount paid for the target corporation's stock minus the target corporation's liabilities. 
D)  All of the above are false.

Question 10

Dreyer Corporation purchased 5% of Willy Corporation's stock five years ago for $100,000. Dreyer then decides to purchase an additional 80% of the Willy stock for $1,000,000 on April 15 of the current year. On the acquisition date, Willy Corporation's liabilities are $150,000. A $300,000 tax liability is incurred by Willy on the Sec. 338 deemed sale. What is the total basis of Willy Corporation's assets for Sec. 338 basis allocation purposes?

Accepted Answer

Grossed- up basis of recently purchased

Question 11

Which of the following definitions of Sec. 338 property classes is not correct?

Accepted Answer

A)  Class I: cash, demand deposits, and similar accounts in banks, savings and loan associations, etc. 
B)  Class II: actively traded personal property such as publicly traded securities 
C)  Class III: covenants not to compete, similar restrictions on trade, etc. 
D)  Class IV: inventory or other property held primarily for sale to customers 
A)  Class I: cash, demand deposits, and similar accounts in banks, savings and loan associations, etc. 
B)  Class II: actively traded personal property such as publicly traded securities 
C)  Class III: covenants not to compete, similar restrictions on trade, etc. 
D)  Class IV: inventory or other property held primarily for sale to customers

Question 12

John Van Kirk owns all the stock of Monmouth Restaurant Corporation in Pittsburgh. John would like to sell his business and retire to sunny Florida now that he has turned 65. Pam, a long- time bartender at Monmouth Restaurant, offers to purchase all the business's noncash assets in exchange for a 25% down payment, with the remaining 75% being paid in five equal annual installments. Interest will be charged at a 10% rate on the unpaid installments. John plans to liquidate the corporation that has operated the restaurant and have Monmouth Restaurant distribute the installment notes and any remaining assets. What tax issues should Monmouth Restaurant, John, and Pam consider with respect to the purchase transaction?

Accepted Answer

• Can Monmouth Restaurant deduct any una

Question 13

$\begin{array}{lr}\text { Fisher stock basis }&\$400,000\
\text { Minus: boot received } & (200,000) \
\text { Plus: gain recognized }(\$ 800,000-\$ 600,000) & \underline{200,000} \
\text { Acme stock basis }&\$400,000
\end{array}$ Briefly describe A, B, C, D, and G reorganization types.

Accepted Answer

A is a merger or consolidation acquisiti

Question 14

Advance rulings are required for all reorganizations.

Accepted Answer

A) True 
 B)False

Question 15

Identify which of the following statements is true.

Accepted Answer

A)  Andrews Corporation gives 10% of its stock worth $200,000 and Andrews notes worth $10,000 in exchange for 80% of Baxter Corporation's stock. The exchange qualifies as a Type B reorganization. 
B)  In a Type B reorganization, with minor exceptions, only voting stock can be used by the acquiring corporation to acquire the target corporation's stock. 
C)  Both a Type B reorganization or a reverse triangular merger will not allow the target corporation to remain in existence. 
D)  All of the above are false. 
A)  Andrews Corporation gives 10% of its stock worth $200,000 and Andrews notes worth $10,000 in exchange for 80% of Baxter Corporation's stock. The exchange qualifies as a Type B reorganization. 
B)  In a Type B reorganization, with minor exceptions, only voting stock can be used by the acquiring corporation to acquire the target corporation's stock. 
C)  Both a Type B reorganization or a reverse triangular merger will not allow the target corporation to remain in existence. 
D)  All of the above are false.

Question 16

Jersey Corporation purchased 50% of Target Corporation's single class of stock on June 1 of this year. They purchased an additional 40% on November 20 of this year. The Sec. 338 election must be made on or before

Accepted Answer

A)  August 15 of next year. 
B)  June 30 of next year. 
C)  June 30 of this year. 
D)  November 30 of this year. 
A)  August 15 of next year. 
B)  June 30 of next year. 
C)  June 30 of this year. 
D)  November 30 of this year.

Question 17

Identify which of the following statements is false.

Accepted Answer

A)  Gain recognized by a shareholder in a tax- free reorganization may be characterized as a dividend. 
B)  Tax- free reorganizations generally do not involve actual redemptions of the stock of the target corporation's shareholders. 
C)  If no gain or loss is recognized by a stock or security holder in a tax- free reorganization, the stock or securities received take a substituted basis equal to the basis of the shares or securities surrendered. 
D)  The acquiring corporation does not recognize gains or losses under Sec. 1001 when it transfers noncash boot property to the target corporation or its shareholders. 
A)  Gain recognized by a shareholder in a tax- free reorganization may be characterized as a dividend. 
B)  Tax- free reorganizations generally do not involve actual redemptions of the stock of the target corporation's shareholders. 
C)  If no gain or loss is recognized by a stock or security holder in a tax- free reorganization, the stock or securities received take a substituted basis equal to the basis of the shares or securities surrendered. 
D)  The acquiring corporation does not recognize gains or losses under Sec. 1001 when it transfers noncash boot property to the target corporation or its shareholders.

Tax attributes of the target corporation are lost when a Sec. 338 deemed liquidation election is made.

Identify which of the following statements is true.

Type A reorganizations include mergers and consolidations.

Identify which of the following statements is true.

Identify which of the following statements is true.

Which of the following definitions of Sec. 338 property classes is not correct?

Fisher stock basis \4 00,000 Minus: boot received (200,000) Plus: gain recognized (\ 800,000-\ 600,000) Acme stock basis \4 00,000 Briefly describe A, B, C, D, and G reorganization types.

Advance rulings are required for all reorganizations.

Identify which of the following statements is true.

Jersey Corporation purchased 50% of Target Corporation's single class of stock on June 1 of this year. They purchased an additional 40% on November 20 of this year. The Sec. 338 election must be made on or before

Identify which of the following statements is false.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

Filters

Exam 7: Corporate Acquisitions and Reorganizations

Tax attributes of the target corporation are lost when a Sec. 338 deemed liquidation election is made.

Identify which of the following statements is true.

Type A reorganizations include mergers and consolidations.

Identify which of the following statements is true.

Identify which of the following statements is true.

Which of the following definitions of Sec. 338 property classes is not correct?

Fisher stock basis \4 00,000 Minus: boot received (200,000) Plus: gain recognized (\ 800,000-\ 600,000) Acme stock basis \4 00,000 Briefly describe A, B, C, D, and G reorganization types.

Advance rulings are required for all reorganizations.

Identify which of the following statements is true.

Jersey Corporation purchased 50% of Target Corporation's single class of stock on June 1 of this year. They purchased an additional 40% on November 20 of this year. The Sec. 338 election must be made on or before

Identify which of the following statements is false.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

Filters