Question 1

Which of the following statements best describes the impact of receiving boot in a section 351 transaction?

Accepted Answer

A)  Boot received has no impact on the recognition of gain or loss realized in a section 351 transaction. 
B)  Boot received causes gain realized to be recognized, but not loss realized. 
C)  Boot received causes loss realized to be recognized, but not gain realized. 
D)  Boot received causes gain and loss realized to be recognized. 
A)  Boot received has no impact on the recognition of gain or loss realized in a section 351 transaction. 
B)  Boot received causes gain realized to be recognized, but not loss realized. 
C)  Boot received causes loss realized to be recognized, but not gain realized. 
D)  Boot received causes gain and loss realized to be recognized. B

Question 2

Maria defers $100 of gain realized in a section 351 transaction. The stock she receives in the exchange has a fair market value of $500. Maria's tax basis in the stock will be $400.

Accepted Answer

A) True 
 B)False  True

Question 3

Jasmine transferred 100 percent of her stock in Woodward Company to Jefferson Corporation in a Type A merger. In exchange, she received stock in Jefferson with a fair market value of $600,000 plus $400,000 in cash. Jasmine's tax basis in the Woodward stock was $1,500,000. What amount of loss does Jasmine recognize in the exchange and what is her basis in the Jefferson stock she receives?

Accepted Answer

A)  $500,000 loss recognized and a basis in Jefferson stock of $600,000 
B)  $500,000 loss recognized and a basis in Jefferson stock of $1,100,000 
C)  No loss recognized and a basis in Jefferson stock of $1,500,000 
D)  No loss recognized and a basis in Jefferson stock of $1,100,000 
A)  $500,000 loss recognized and a basis in Jefferson stock of $600,000 
B)  $500,000 loss recognized and a basis in Jefferson stock of $1,100,000 
C)  No loss recognized and a basis in Jefferson stock of $1,500,000 
D)  No loss recognized and a basis in Jefferson stock of $1,100,000 D

Question 4

The City of Boston made a capital contribution of land to Fenway Company as an inducement to the company to build a manufacturing plant in the city. What is the tax basis of the land to Fenway Company?

Accepted Answer

The answer of The City of Boston made a capital...

Question 5

Roberta transfers property with a tax basis of $400 and a fair market value of $500 to a corporation in exchange for stock with a fair market value of $350 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is the amount realized by Roberta in the exchange?

Accepted Answer

A)  $500 
B)  $400 
C)  $350 
D)  $250 
A)  $500 
B)  $400 
C)  $350 
D)  $250

Question 6

Jalen transferred his 10 percent interest to Wolverine Company as part of a complete liquidation of the company. In the exchange, he received land with a fair market value of $100,000. Jalen's basis in the Wolverine stock was $50,000. The land had a basis to Wolverine Company of $80,000. What amount of gain does Jalen recognize in the exchange and what is his basis in the land he receives?

Accepted Answer

A)  $50,000 gain recognized and a basis in the land of $100,000 
B)  $50,000 gain recognized and a basis in the land of $80,000 
C)  No gain recognized and a basis in the land of $80,000 
D)  No gain recognized and a basis in the land of $50,000 
A)  $50,000 gain recognized and a basis in the land of $100,000 
B)  $50,000 gain recognized and a basis in the land of $80,000 
C)  No gain recognized and a basis in the land of $80,000 
D)  No gain recognized and a basis in the land of $50,000

Question 7

Julian transferred 100 percent of his stock in Lemon Company to Apricot Corporation in a Type B stock-for-stock exchange. In exchange, he received stock in Apricot with a fair market value of $200,000. Julian's tax basis in the Lemon stock was $400,000. What amount of loss does Julian recognize in the exchange and what is his basis in the Apricot stock he receives?

Accepted Answer

A)  $200,000 loss recognized and a basis in Apricot stock of $200,000 
B)  No loss recognized and a basis in Apricot stock of $400,000 
C)  $200,000 loss recognized and a basis in Apricot stock of $400,000 
D)  No loss recognized and a basis in Apricot stock of $200,000 
A)  $200,000 loss recognized and a basis in Apricot stock of $200,000 
B)  No loss recognized and a basis in Apricot stock of $400,000 
C)  $200,000 loss recognized and a basis in Apricot stock of $400,000 
D)  No loss recognized and a basis in Apricot stock of $200,000

Question 8

In December 2011, Zeb incurred a $100,000 loss on the sale of Pike Corporation stock that he purchased in 2005. The stock satisfied all of the §1244 stock requirements at the time of issue. In addition, Zeb reported a long-term capital gain of $40,000 in 2011. Zeb is single. How much of the loss can Zeb deduct in 2011, and what is the character of the loss?

Accepted Answer

$50,000 ordinary loss under §1244, $40,0

Question 9

Amy transfers property with a tax basis of $900 and a fair market value of $600 to a corporation in exchange for stock with a fair market value of $450 in a transaction that qualifies for deferral under section 351. The corporation assumed a liability of $150 on the property transferred. What is Amy's tax basis in the stock received in the exchange?

Accepted Answer

A)  $900 
B)  $750 
C)  $650 
D)  $450 
A)  $900 
B)  $750 
C)  $650 
D)  $450

Question 10

Simone transferred 100 percent of her stock in Purple Company to Plum Corporation in a Type A merger. In exchange, she received stock in Plum with a fair market value of $500,000 plus $500,000 in cash. Simone's tax basis in the Purple stock was $200,000. What amount of gain does Simone recognize in the exchange and what is her basis in the Plum stock she receives?

Accepted Answer

A)  $800,000 gain recognized and a basis in Plum stock of $1,000,000 
B)  $800,000 gain recognized and a basis in Plum stock of $500,000 
C)  $500,000 gain recognized and a basis in Plum stock of $500,000 
D)  $500,000 gain recognized and a basis in Plum stock of $200,000 
A)  $800,000 gain recognized and a basis in Plum stock of $1,000,000 
B)  $800,000 gain recognized and a basis in Plum stock of $500,000 
C)  $500,000 gain recognized and a basis in Plum stock of $500,000 
D)  $500,000 gain recognized and a basis in Plum stock of $200,000

Question 11

A liquidated corporation always recognizes gain realized in a complete liquidation.

Accepted Answer

A) True 
 B)False

Question 12

What amount of gain or loss does Pennsylvania recognize in the complete liquidation?

Accepted Answer

Pennsylvania has a taxable tra

Question 13

Katarina transferred her 10 percent interest to Spartan Company as part of a complete liquidation of the company. In the exchange, she received land with a fair market value of $200,000. Katarina's basis in the Spartan stock was $100,000. The land had a basis to Spartan Company of $50,000. What amount of gain does Spartan recognize in the exchange and what is Katarina's basis in the land she receives?

Accepted Answer

A)  $100,000 gain recognized by Spartan and a basis in the land of $200,000 
B)  $150,000 gain recognized by Spartan and a basis in the land of $200,000 
C)  No gain recognized by Spartan and a basis in the land of $100,000 
D)  No gain recognized by Spartan and a basis in the land of $50,000 
A)  $100,000 gain recognized by Spartan and a basis in the land of $200,000 
B)  $150,000 gain recognized by Spartan and a basis in the land of $200,000 
C)  No gain recognized by Spartan and a basis in the land of $100,000 
D)  No gain recognized by Spartan and a basis in the land of $50,000

Question 14

Sue transferred 100 percent of her stock in Oakland Company to Applegate Corporation in a Type A merger. In exchange she received stock in Applegate with a fair market value of $800,000 plus $400,000 in cash. Sue's tax basis in the Oakland stock was $1,500,000. What amount of gain or loss does Sue recognize in the exchange and what is her basis in the Applegate stock she receives?

Accepted Answer

No loss recognized.

Question 15

What amount of gain or loss does Gary recognize in the complete liquidation?

Accepted Answer

Gary recognizes gain of $70,00

Question 16

Billie transferred her 20 percent interest to Jean Company as part of a complete liquidation of the company. In the exchange, she received land with a fair market value of $200,000. Billie's basis in the Jean stock was $100,000. The land had a basis to Jean Company of $400,000. What amount of loss does Jean recognize in the exchange and what is Billie's basis in the land she receives? Billie is not considered a related party to Jean Company.

Accepted Answer

A)  $200,000 loss recognized by Jean and a basis in the land of $200,000 
B)  $200,000 loss recognized by Jean and a basis in the land of $400,000 
C)  No loss recognized by Jean and a basis in the land of $200,000 
D)  No loss recognized by Jean and a basis in the land of $400,000 
A)  $200,000 loss recognized by Jean and a basis in the land of $200,000 
B)  $200,000 loss recognized by Jean and a basis in the land of $400,000 
C)  No loss recognized by Jean and a basis in the land of $200,000 
D)  No loss recognized by Jean and a basis in the land of $400,000

Question 17

Which of the following statements best describes the requirement that must be met in a tax-deferred Type B stock-for-stock reorganization?

Accepted Answer

A)  The 40 percent continuity of interest test must be met with respect to the stock transferred from the acquisition corporation to the target shareholders. 
B)  The acquiring corporation must hold substantially all of the target's properties after the acquisition. 
C)  The target corporation shareholders must receive "solely" voting stock in the acquiring corporation in the exchange. 
D)  The target corporation shareholders must receive voting stock in the acquiring corporation in exchange for 80 percent or more of the target corporation stock. 
A)  The 40 percent continuity of interest test must be met with respect to the stock transferred from the acquisition corporation to the target shareholders. 
B)  The acquiring corporation must hold substantially all of the target's properties after the acquisition. 
C)  The target corporation shareholders must receive "solely" voting stock in the acquiring corporation in the exchange. 
D)  The target corporation shareholders must receive voting stock in the acquiring corporation in exchange for 80 percent or more of the target corporation stock.

Question 18

Tax considerations always are the primary reason for how an acquisition is structured.

Accepted Answer

A) True 
 B)False

Question 19

Jamie transferred 100 percent of her stock in Fox Company to Otter Corporation in a Type A merger. In exchange, she received stock in Otter with a fair market value of $400,000 plus $600,000 in cash. Jamie's tax basis in the Fox stock was $600,000. What amount of gain does Jamie recognize in the exchange and what is her basis in the Otter stock she receives?

Accepted Answer

A)  $400,000 gain recognized and a basis in Otter stock of $400,000 
B)  $600,000 gain recognized and a basis in Otter stock of $400,000 
C)  $400,000 gain recognized and a basis in Otter stock of $600,000 
D)  $600,000 gain recognized and a basis in Otter stock of $600,000 
A)  $400,000 gain recognized and a basis in Otter stock of $400,000 
B)  $600,000 gain recognized and a basis in Otter stock of $400,000 
C)  $400,000 gain recognized and a basis in Otter stock of $600,000 
D)  $600,000 gain recognized and a basis in Otter stock of $600,000

Question 20

To meet the control test under section 351, a taxpayer transferring property to a corporation must own 80 percent or more of the corporation's voting stock and 80 percent of each class of nonvoting stock after the transfer.

Accepted Answer

A) True 
 B)False

Which of the following statements best describes the impact of receiving boot in a section 351 transaction?

Maria defers $100 of gain realized in a section 351 transaction. The stock she receives in the exchange has a fair market value of $500. Maria's tax basis in the stock will be $400.

The City of Boston made a capital contribution of land to Fenway Company as an inducement to the company to build a manufacturing plant in the city. What is the tax basis of the land to Fenway Company?

A liquidated corporation always recognizes gain realized in a complete liquidation.

What amount of gain or loss does Pennsylvania recognize in the complete liquidation?

What amount of gain or loss does Gary recognize in the complete liquidation?

Which of the following statements best describes the requirement that must be met in a tax-deferred Type B stock-for-stock reorganization?

Tax considerations always are the primary reason for how an acquisition is structured.

To meet the control test under section 351, a taxpayer transferring property to a corporation must own 80 percent or more of the corporation's voting stock and 80 percent of each class of nonvoting stock after the transfer.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

Filters

Exam 19: Corporate Formation, Reorganization, and Liquidation

Which of the following statements best describes the impact of receiving boot in a section 351 transaction?

Maria defers $100 of gain realized in a section 351 transaction. The stock she receives in the exchange has a fair market value of $500. Maria's tax basis in the stock will be $400.

The City of Boston made a capital contribution of land to Fenway Company as an inducement to the company to build a manufacturing plant in the city. What is the tax basis of the land to Fenway Company?

A liquidated corporation always recognizes gain realized in a complete liquidation.

What amount of gain or loss does Pennsylvania recognize in the complete liquidation?

What amount of gain or loss does Gary recognize in the complete liquidation?

Which of the following statements best describes the requirement that must be met in a tax-deferred Type B stock-for-stock reorganization?

Tax considerations always are the primary reason for how an acquisition is structured.

To meet the control test under section 351, a taxpayer transferring property to a corporation must own 80 percent or more of the corporation's voting stock and 80 percent of each class of nonvoting stock after the transfer.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

Filters