Question 1

Identify which of the following statements is true.

Accepted Answer

A) Depreciation recapture rules do not override the nonrecognition of gain or loss rules. 
B) The acquisition of liabilities by an acquiring corporation will trigger a gain. 
C) A target corporation will recognize a gain when it distributes stock to its shareholders. 
D) The basis of property acquired in a reorganization is its FMV. 
A) Depreciation recapture rules do not override the nonrecognition of gain or loss rules. 
B) The acquisition of liabilities by an acquiring corporation will trigger a gain. 
C) A target corporation will recognize a gain when it distributes stock to its shareholders. 
D) The basis of property acquired in a reorganization is its FMV.

Question 2

Rocky is a party to a tax-free asset-for-stock reorganization. As part of the transaction, Rocky exchanges 100% of the Hope Corporation stock with a $40,000 basis and a $50,000 FMV for Moth Corporation stock worth $40,000 and $10,000 cash. Hope Corporation is subsequently liquidated as part of the reorganization, with Moth receiving the Hope assets and liabilities. Rocky is

Accepted Answer

A) not required to recognize any gain or loss. 
B) required to recognize capital gain or dividend income of $10,000, depending on Hope Corporation's current and accumulated E&P and Rocky's postacquisition interest in Moth Corporation. 
C) required to recognize dividend income of $10,000 if Hope Corporation's current and accumulated E&P is at least $10,000. 
D) able to recognize capital gain income of $10,000 without regard to his post-acquisition interest in Moth Corporation. 
A) not required to recognize any gain or loss. 
B) required to recognize capital gain or dividend income of $10,000, depending on Hope Corporation's current and accumulated E&P and Rocky's postacquisition interest in Moth Corporation. 
C) required to recognize dividend income of $10,000 if Hope Corporation's current and accumulated E&P is at least $10,000. 
D) able to recognize capital gain income of $10,000 without regard to his post-acquisition interest in Moth Corporation.

Question 3

In a nontaxable reorganization, shareholders of the target corporation recognize gain or loss.

Accepted Answer

A) True 
 B)False

Question 4

Baxter Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $500,000 to Duke Corporation for 90% of Duke's single class of stock worth $500,000. The Duke stock is then exchanged for Frank's 50% interest in Baxter Corporation. Frank's basis in the Baxter stock he surrenders is $120,000. What is Duke Corporation's basis in the assets it receives?

Accepted Answer

Duke has a

Question 5

Brown Corporation has assets with a $650,000 basis and an $800,000 FMV. The assets are subject to $250,000 in liabilities. Clark Corporation acquires all of Brown's assets and liabilities for $600,000 in cash. Brown Corporation then liquidates. What is Clark Corporation's basis in the acquired assets?

Accepted Answer

In a taxable asset acquisition, the purc

Question 6

Type A reorganizations include mergers and consolidations.

Accepted Answer

A) True 
 B)False

Question 7

Taxable acquisition transactions can either be a purchase of assets or a purchase of stock.

Accepted Answer

A) True 
 B)False

Question 8

Identify which of the following statements is true.

Accepted Answer

A) The control requirement for Sec. 355 differs from the control requirement under Sec. 351. 
B) Aspect Corporation transfers assets to newly created Expert Corporation in exchange for all of Expert's stock. Shortly after the transfer, Aspect exchanges one-half of the Expert stock that it receives for land. The individuals transferring the land have never been Aspect shareholders. This transaction qualifies as a divisive Type D reorganization and is tax-free to all parties. 
C) Common stock can be exchanged for preferred stock in the same corporation as a Type E reorganization. 
D) All of the above are false. 
A) The control requirement for Sec. 355 differs from the control requirement under Sec. 351. 
B) Aspect Corporation transfers assets to newly created Expert Corporation in exchange for all of Expert's stock. Shortly after the transfer, Aspect exchanges one-half of the Expert stock that it receives for land. The individuals transferring the land have never been Aspect shareholders. This transaction qualifies as a divisive Type D reorganization and is tax-free to all parties. 
C) Common stock can be exchanged for preferred stock in the same corporation as a Type E reorganization. 
D) All of the above are false.

Question 9

Bob exchanges 4,000 shares of Beetle Corporation stock that he had purchased for $800,000 for 6,000 shares of Butterfly Corporation common stock with a fair market value of $1,000,000. What is Bob's recognized gain on the exchange and his basis in the Butterfly stock?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 10

Acquiring Corporation is 100%-owned by Peter Hart. Target Corporation is 100% owned by Dick Weber. The two individuals are not related. Target Corporation has $400,000 of NOL carryovers at the time Acquiring Corporation is considering making a cash acquisition of part or all of Target Corporation's stock. What is the maximum amount of Target stock that can be acquired in a single transaction without the Sec. 382 loss limitation rules applying to the NOLs?

Accepted Answer

A) 49% 
B) 50% 
C) 80% 
D) Any acquisition of Target stock will cause the Sec. 382 loss limitation to apply. 
A) 49% 
B) 50% 
C) 80% 
D) Any acquisition of Target stock will cause the Sec. 382 loss limitation to apply.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

In a Type B reorganization, the acquiring corporation obtains substantially all of the target corporation's assets in exchange for its voting stock and a limited amount of other consideration.

Accepted Answer

A) True 
 B)False

Question 13

Baxter Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $500,000 to Duke Corporation for 90% of Duke's single class of stock worth $500,000. The Duke stock is then exchanged for Frank's 50% interest in Baxter Corporation. Frank's basis in the Baxter stock he surrenders is $120,000. What is Frank's basis in the Duke stock he receives?

Accepted Answer

The correct answer is $120,000

Question 14

Paris Corporation has E&P of $200,000. Paris owns all of Slider Corporation's stock, which is worth $80,000. The stock has been held for five years. Paris distributes all of the Slider stock and $20,000 cash to a 50% shareholder in exchange for all of the shareholder's 100 shares of Paris stock. The exchange qualifies as a Sec. 355 split-off transaction. The 50% shareholder's basis in the Paris stock surrendered is $90,000. What is the amount of the gain that the 50% shareholder must recognize?

Accepted Answer

@#IMG-DLM& The recognized gain is taxed as a capit

Question 15

Acquiring Corporation acquires all of the stock of Target Corporation in a Type B (stock-for-stock)reorganization. Both corporations have always filed separate tax returns. Which one of the following statements regarding the acquisition is correct?

Accepted Answer

A) Acquiring and Target Corporations can elect to file a consolidated tax return. 
B) Acquiring and Target Corporations must file a consolidated tax return. 
C) Acquiring Corporation assumes all of the tax attributes of Target Corporation. 
D) Acquiring Corporation must step up or step down the basis of the Target Corporation's assets to their FMV on the acquisition date. 
A) Acquiring and Target Corporations can elect to file a consolidated tax return. 
B) Acquiring and Target Corporations must file a consolidated tax return. 
C) Acquiring Corporation assumes all of the tax attributes of Target Corporation. 
D) Acquiring Corporation must step up or step down the basis of the Target Corporation's assets to their FMV on the acquisition date.

Question 16

The Sec. 338 deemed sale rules require that 70% of the target corporation's stock be owned.

Accepted Answer

A) True 
 B)False

Question 17

In a nontaxable reorganization, the acquiring corporation has a holding period for the acquired assets that begins on the day after the transaction date.

Accepted Answer

A) True 
 B)False

Question 18

Identify which of the following statements is true.

Accepted Answer

A) A tax-free spin-off coming under Sec. 355 occurs when a parent corporation distributes stock in a controlled subsidiary corporation in exchange for some of its own stock. 
B) Tax-free split-offs and spin-offs coming under Sec. 355 require the surrender of shareholder stock. 
C) When boot is received in a Sec. 355 spin-off transaction, the FMV of the boot will be a dividend to the extent of the shareholder's ratable share of the distributing corporation's E&P. 
D) All of the above are false. 
A) A tax-free spin-off coming under Sec. 355 occurs when a parent corporation distributes stock in a controlled subsidiary corporation in exchange for some of its own stock. 
B) Tax-free split-offs and spin-offs coming under Sec. 355 require the surrender of shareholder stock. 
C) When boot is received in a Sec. 355 spin-off transaction, the FMV of the boot will be a dividend to the extent of the shareholder's ratable share of the distributing corporation's E&P. 
D) All of the above are false.

Question 19

In a stock acquisition, the target corporation remains intact as a subsidiary of the acquiring corporation.

Accepted Answer

A) True 
 B)False

Question 20

Identify which of the following statements is true.

Accepted Answer

A) Able Corporation (New York)transfers its assets to Able Corporation (Delaware)in exchange for all of its stock. Able Corporation (New York)is liquidated. This exchange is a Type F reorganization. 
B) Strict adherence to legislative guidelines with regard to reorganizations is sufficient for tax-free treatment. 
C) A suitable business purpose for a tax-free reorganization is to permit the minimization of shareholder taxes. 
D) All of the above are false. 
A) Able Corporation (New York)transfers its assets to Able Corporation (Delaware)in exchange for all of its stock. Able Corporation (New York)is liquidated. This exchange is a Type F reorganization. 
B) Strict adherence to legislative guidelines with regard to reorganizations is sufficient for tax-free treatment. 
C) A suitable business purpose for a tax-free reorganization is to permit the minimization of shareholder taxes. 
D) All of the above are false.

Identify which of the following statements is true.

In a nontaxable reorganization, shareholders of the target corporation recognize gain or loss.

Type A reorganizations include mergers and consolidations.

Taxable acquisition transactions can either be a purchase of assets or a purchase of stock.

Identify which of the following statements is true.

Bob exchanges 4,000 shares of Beetle Corporation stock that he had purchased for $800,000 for 6,000 shares of Butterfly Corporation common stock with a fair market value of $1,000,000. What is Bob's recognized gain on the exchange and his basis in the Butterfly stock?

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

In a Type B reorganization, the acquiring corporation obtains substantially all of the target corporation's assets in exchange for its voting stock and a limited amount of other consideration.

Acquiring Corporation acquires all of the stock of Target Corporation in a Type B (stock-for-stock)reorganization. Both corporations have always filed separate tax returns. Which one of the following statements regarding the acquisition is correct?

The Sec. 338 deemed sale rules require that 70% of the target corporation's stock be owned.

In a nontaxable reorganization, the acquiring corporation has a holding period for the acquired assets that begins on the day after the transaction date.

Identify which of the following statements is true.

In a stock acquisition, the target corporation remains intact as a subsidiary of the acquiring corporation.

Identify which of the following statements is true.

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

Us Taxation of Foreign-Related Transactions

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Exam 7: Corporate Acquisitions and Reorganizations

Identify which of the following statements is true.

In a nontaxable reorganization, shareholders of the target corporation recognize gain or loss.

Type A reorganizations include mergers and consolidations.

Taxable acquisition transactions can either be a purchase of assets or a purchase of stock.

Identify which of the following statements is true.

Bob exchanges 4,000 shares of Beetle Corporation stock that he had purchased for $800,000 for 6,000 shares of Butterfly Corporation common stock with a fair market value of $1,000,000. What is Bob's recognized gain on the exchange and his basis in the Butterfly stock?

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

In a Type B reorganization, the acquiring corporation obtains substantially all of the target corporation's assets in exchange for its voting stock and a limited amount of other consideration.

Acquiring Corporation acquires all of the stock of Target Corporation in a Type B (stock-for-stock)reorganization. Both corporations have always filed separate tax returns. Which one of the following statements regarding the acquisition is correct?

The Sec. 338 deemed sale rules require that 70% of the target corporation's stock be owned.

In a nontaxable reorganization, the acquiring corporation has a holding period for the acquired assets that begins on the day after the transaction date.

Identify which of the following statements is true.

In a stock acquisition, the target corporation remains intact as a subsidiary of the acquiring corporation.

Identify which of the following statements is true.

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

Us Taxation of Foreign-Related Transactions

Filters