Question 1

A Sec. 332 liquidation requires a complete statement be filed with the distributee's tax return

Accepted Answer

A)  when a liquidating distribution is received. 
B)  when the liquidation is compiled. 
C)  when the liquidation plan is adopted. 
D)  No statement is required with the return. 
A)  when a liquidating distribution is received. 
B)  when the liquidation is compiled. 
C)  when the liquidation plan is adopted. 
D)  No statement is required with the return.

Question 2

Texas Corporation is undergoing a complete liquidation and distributes land to Robert, one of its shareholders, in exchange for all of Robert's stock. The land has a basis of $300,000 and an FMV of $400,000 on Texas Corporation's books and is subject to a $325,000 liability. Robert assumes the liability on the property. Robert's basis in his Texas Corporation stock is $100,000. What is the amount of gain or loss recognized by Robert on the distribution?

Accepted Answer

A)  $25,000 loss 
B)  $25,000 gain 
C)  $175,000 gain 
D)  No gain or loss is recognized. 
A)  $25,000 loss 
B)  $25,000 gain 
C)  $175,000 gain 
D)  No gain or loss is recognized.

Question 3

Sandy, a cash method of accounting taxpayer, has a basis of $46,000 in her 500 shares of Newt Corp stock. She receives the following distributions as part of Newt's plan of liquidation.   The amount of the final distribution is not known on December 31, 2017. What are the tax conseque the distributions?

Accepted Answer

A)  Sandy will recognize the entire loss in 2018. 
B)  Sandy will recognize a loss of $4,500 in 2017 and a $1,500 loss in 2018. 
C)  Sandy will recognize the entire loss in 2017. 
D)  None of the above is correct. 
A)  Sandy will recognize the entire loss in 2018. 
B)  Sandy will recognize a loss of $4,500 in 2017 and a $1,500 loss in 2018. 
C)  Sandy will recognize the entire loss in 2017. 
D)  None of the above is correct.

Question 4

Section 336 prevents recognition of a loss when making a pro rata distribution of property to a related person.

Accepted Answer

A) True 
 B)False

Question 5

Dexer Corporation is owned 70% by Amy and 30% by Brad. Dexer Corporation owns Eagle Corporation stock with a $50,000 adjusted basis and a $30,000 FMV. The stock is not disqualified property. As part of a complete liquidation, the Eagle Corporation stock is distributed to Amy. Amy's basis in her Dexer stock is $40,000. Dexer Corporation will recognize

Accepted Answer

A)  no loss. 
B)  a $20,000 loss. 
C)  a $10,000 loss. 
D)  none of the above 
A)  no loss. 
B)  a $20,000 loss. 
C)  a $10,000 loss. 
D)  none of the above

Question 6

Identify which of the following statements is false.

Accepted Answer

A)  An individual taxpayer, who is assessed an additional payment of money based on stock ownership in a corporation whose stock is redeemed in a complete liquidation, may recognize a capital loss to the extent of the additional assessment. 
B)  The open transaction doctrine defers the shareholder's gain or loss from a liquidation until the assets can be valued by sale or collection. 
C)  The IRS asserts that the open transaction doctrine should be used only in extraordinary circumstances. 
D)  The open transaction doctrine as applied to complete corporate liquidations refers to the numerous planning alternatives available when liquidating a corporation. 
A)  An individual taxpayer, who is assessed an additional payment of money based on stock ownership in a corporation whose stock is redeemed in a complete liquidation, may recognize a capital loss to the extent of the additional assessment. 
B)  The open transaction doctrine defers the shareholder's gain or loss from a liquidation until the assets can be valued by sale or collection. 
C)  The IRS asserts that the open transaction doctrine should be used only in extraordinary circumstances. 
D)  The open transaction doctrine as applied to complete corporate liquidations refers to the numerous planning alternatives available when liquidating a corporation.

Question 7

A subsidiary recognizes no gain or loss on a distribution to a parent corporation owning the majority of the subsidiary's stock in a complete liquidation.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

What basis do both the parent and minority shareholders take in the assets received in a Sec. 332 liquidation?

Accepted Answer

Since the parent recognizes no gain or l

Question 10

Identify which of the following statements is false.

Accepted Answer

A)  A plan of liquidation must be produced in writing in order to be accepted by the Internal Revenue Service. 
B)  A corporation must file an information return with the Internal Revenue Service within thirty days of adopting a resolution to liquidate. 
C)  The adoption of a formal plan of liquidation can provide additional benefits under tax laws to the corporation and its shareholders. 
D)  The adoption of a plan of liquidation permits a parent corporation a three- year time period to carry out the complete liquidation of its subsidiary. 
A)  A plan of liquidation must be produced in writing in order to be accepted by the Internal Revenue Service. 
B)  A corporation must file an information return with the Internal Revenue Service within thirty days of adopting a resolution to liquidate. 
C)  The adoption of a formal plan of liquidation can provide additional benefits under tax laws to the corporation and its shareholders. 
D)  The adoption of a plan of liquidation permits a parent corporation a three- year time period to carry out the complete liquidation of its subsidiary.

Question 11

Generally, a corporation recognizes a gain, but not a loss, on a liquidating distribution.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)  0. 
B)  $500,000. 
C)  $200,000. 
D)  cannot be determined from the facts presented 
A)  0. 
B)  $500,000. 
C)  $200,000. 
D)  cannot be determined from the facts presented

Question 13

Under the general liquidation rules, Kansas Corporation is liquidated, with Sam Topeka receiving $20,000 in cash plus other property having a $24,000 FMV. Sam Topeka's basis in his Kansas stock is $32,000. What is Sam Topeka's amount realized and gain recognized on the liquidation?

Accepted Answer

Sam Topeka's amount realized i

Question 14

Liquidation rules generally are applied the same to the following organizations except for

Accepted Answer

A)  S corporations. 
B)  C corporations. 
C)  subsidiary corporations (80% controlled). 
D)  subsidiary corporations (less than 80% controlled). 
A)  S corporations. 
B)  C corporations. 
C)  subsidiary corporations (80% controlled). 
D)  subsidiary corporations (less than 80% controlled).

Question 15

What are the differences, if any, in the tax rules applying to distributions made to a parent corporation and a minority shareholder when a controlled corporation liquidates?

Accepted Answer

Shareholders receiving liquidating distr

Question 16

Identify which of the following statements is true.

Accepted Answer

A)  The liquidating corporation does not recognize gains and losses when making a distribution of nonmoney property. 
B)  In general, a noncorporate shareholder that receives a distribution in complete liquidation of the liquidating corporation recognizes his or her entire realized gain as a capital gain. 
C)  The basis for nonmoney property received by a noncorporate shareholder as part of a liquidating distribution is the same as its basis on the books of the liquidating corporation. 
D)  All of the above are false. 
A)  The liquidating corporation does not recognize gains and losses when making a distribution of nonmoney property. 
B)  In general, a noncorporate shareholder that receives a distribution in complete liquidation of the liquidating corporation recognizes his or her entire realized gain as a capital gain. 
C)  The basis for nonmoney property received by a noncorporate shareholder as part of a liquidating distribution is the same as its basis on the books of the liquidating corporation. 
D)  All of the above are false.

Question 17

In a Sec. 332 liquidation, what bases do both the parent and minority shareholders take in the assets received?

Accepted Answer

Because no gain/loss is recognized by th

Question 18

Barbara owns 100 shares of Bond Corporation stock with a basis of $40,000. Barbara receives two liquidating distributions, including $16,000 paid last year and $20,000 paid in the current year. An additional distribution of an undetermined amount is expected next year. On last year's tax return, Barbara can recognize a loss of

Accepted Answer

A)  $1,000. 
B)  $4,000. 
C)  $0. 
D)  $14,000. 
A)  $1,000. 
B)  $4,000. 
C)  $0. 
D)  $14,000.

Question 19

Identify which of the following statements is true.

Accepted Answer

A)  When computing the corporate- level gain on a liquidating distribution, the FMV of the property cannot exceed the liability assumed or acquired by the shareholder. 
B)  The FMV of property distributed by a liquidating corporation can be less than the amount of the liability assumed or acquired by the shareholder. 
C)  With limited exceptions, a loss can be recognized by a liquidating corporation when it makes a liquidating distribution of property that has declined in value. 
D)  All of the above are false. 
A)  When computing the corporate- level gain on a liquidating distribution, the FMV of the property cannot exceed the liability assumed or acquired by the shareholder. 
B)  The FMV of property distributed by a liquidating corporation can be less than the amount of the liability assumed or acquired by the shareholder. 
C)  With limited exceptions, a loss can be recognized by a liquidating corporation when it makes a liquidating distribution of property that has declined in value. 
D)  All of the above are false.

Question 20

Identify which of the following statements is false.

Accepted Answer

A)  Sec. 337(a) provides that the liquidating corporation recognizes no gain or loss on the distribution of property to the 80% distributee in a complete Sec. 332 liquidation. 
B)  A corporation that distributes the stock of a subsidiary may elect to treat the distribution as a sale of the subsidiary's assets. 
C)  The depreciation recapture provisions in Secs. 1245 and 1250 override the Sec. 337(a) nonrecognition rule if a controlled subsidiary corporation is liquidated into its parent corporation. 
D)  Liquidating distributions made to minority shareholders in the tax- free liquidation of a controlled subsidiary corporation are treated by the liquidating corporation in the same way as nonliquidating distributions. 
A)  Sec. 337(a) provides that the liquidating corporation recognizes no gain or loss on the distribution of property to the 80% distributee in a complete Sec. 332 liquidation. 
B)  A corporation that distributes the stock of a subsidiary may elect to treat the distribution as a sale of the subsidiary's assets. 
C)  The depreciation recapture provisions in Secs. 1245 and 1250 override the Sec. 337(a) nonrecognition rule if a controlled subsidiary corporation is liquidated into its parent corporation. 
D)  Liquidating distributions made to minority shareholders in the tax- free liquidation of a controlled subsidiary corporation are treated by the liquidating corporation in the same way as nonliquidating distributions.

A Sec. 332 liquidation requires a complete statement be filed with the distributee's tax return

Section 336 prevents recognition of a loss when making a pro rata distribution of property to a related person.

Identify which of the following statements is false.

A subsidiary recognizes no gain or loss on a distribution to a parent corporation owning the majority of the subsidiary's stock in a complete liquidation.

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

What basis do both the parent and minority shareholders take in the assets received in a Sec. 332 liquidation?

Identify which of the following statements is false.

Generally, a corporation recognizes a gain, but not a loss, on a liquidating distribution.

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

Under the general liquidation rules, Kansas Corporation is liquidated, with Sam Topeka receiving $20,000 in cash plus other property having a $24,000 FMV. Sam Topeka's basis in his Kansas stock is $32,000. What is Sam Topeka's amount realized and gain recognized on the liquidation?

Liquidation rules generally are applied the same to the following organizations except for

What are the differences, if any, in the tax rules applying to distributions made to a parent corporation and a minority shareholder when a controlled corporation liquidates?

Identify which of the following statements is true.

In a Sec. 332 liquidation, what bases do both the parent and minority shareholders take in the assets received?

Identify which of the following statements is true.

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 Acquisitions and Reorganizations

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters

Exam 6: Corporate Liquidating Distributions

A Sec. 332 liquidation requires a complete statement be filed with the distributee's tax return

Section 336 prevents recognition of a loss when making a pro rata distribution of property to a related person.

Identify which of the following statements is false.

A subsidiary recognizes no gain or loss on a distribution to a parent corporation owning the majority of the subsidiary's stock in a complete liquidation.

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

What basis do both the parent and minority shareholders take in the assets received in a Sec. 332 liquidation?

Identify which of the following statements is false.

Generally, a corporation recognizes a gain, but not a loss, on a liquidating distribution.

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

Under the general liquidation rules, Kansas Corporation is liquidated, with Sam Topeka receiving $20,000 in cash plus other property having a $24,000 FMV. Sam Topeka's basis in his Kansas stock is $32,000. What is Sam Topeka's amount realized and gain recognized on the liquidation?

Liquidation rules generally are applied the same to the following organizations except for

What are the differences, if any, in the tax rules applying to distributions made to a parent corporation and a minority shareholder when a controlled corporation liquidates?

Identify which of the following statements is true.

In a Sec. 332 liquidation, what bases do both the parent and minority shareholders take in the assets received?

Identify which of the following statements is true.

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 Acquisitions and Reorganizations

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters