Exam 6: Corporate Liquidating Distributions

Prime Corporation liquidates its 85%-owned subsidiary Bass Corporation under the provisions of Secs.332 and 337.Bass Corporation distributes land to its minority shareholder,John,who owns a 15% interest.The property received by John has a $55,000 FMV.The land was used in the Bass Corporation's business and has a $65,000 adjusted basis and is subject to a $10,000 liability,which is assumed by John.John's basis in his stock is $25,000.What gain or loss will John and Bass Corporation recognize on the distribution of the land?

Barnett Corporation owns an office building that cost $900,000.Barnett has taken $600,000 of depreciation on the building.The property is subject to a $600,000 mortgage.The office building has a current FMV of $400,000.Barnett Corporation is liquidated and the office building is distributed to a single individual shareholder who assumes the mortgage.Barnett Corporation must recognize

The general rule for tax attributes of liquidating corporations is

What are the tax consequences of a cash-method shareholder,subsequent to a liquidation,if obligated to pay a contingent liability of the liquidated corporation?

Identify which of the following statements is true.

Santa Fe Corporation adopts a plan of liquidation late in the current tax year in which it expects to earn $100,000 profits from its operating activities.Santa Fe's operating activities are discontinued before the end of the year.Pursuant to the liquidation,it distributes assets,which result in the recognition of $30,000 of ordinary losses.Santa Fe also distributes assets that have appreciated in value,which results in the recognition of $30,000 of ordinary gains.Generally,Santa Fe Corporation should distribute

Identify which of the following statements is true.

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

Identify which of the following statements is false.

Identify which of the following statements is true.

Identify which of the following statements is true.

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 corporation is required to file Form 966 within 30 days after the adoption of a plan of liquidation.

If a liquidating subsidiary corporation primarily has loss property to distribute,the parent corporation should

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

Parent Corporation owns 70% of Sam Corporation's single class of stock.This year,Parent Corporation purchases for cash the remaining 30% of Sam Corporation's stock from four individual investors pursuant to a tender offer.A plan of liquidation is approved by Sam Corporation's shareholders during the last month of this year,and Sam Corporation's assets are distributed by year-end to Parent Corporation in exchange for all of Sam's outstanding stock.Parent Corporation should

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

For that following set of facts,what are the tax consequences to Parent Corporation,Subsidiary Corporation,and a Subsidiary Corporation shareholder,Melisa? Parent Corporation owns 80% of Subsidiary Corporation's stock.Melisa owns the remaining 20% of the Subsidiary stock.Parent and Melisa's stock have adjusted bases of $100,000 and $25,000,respectively,for their Subsidiary stock.Subsidiary distributes land having a $125,000 adjusted basis and a $200,000 FMV to Parent and $50,000 in cash to Melisa.

Chip and Dale are each 50% owners of Tree Corporation,a holding company.They have each held their stock since the company was formed five years ago.Tree's money is invested almost entirely in stocks,bonds,rental real estate,and land.All of the stocks are traded on the New York Stock Exchange except for 1,000 shares of Conifer Corporation stock.Conifer is privately held by 50 individuals.Last year,Conifer reported about $2 million in net income.During a meeting with Chip and Dale,you discover that they plan to liquidate Tree Corporation as soon as possible to avoid the personal holding company tax.What tax issues should Chip and Dale consider with respect to this liquidation?

Mary receives a liquidating distribution from Snell Corporation as part of a redemption of all of its stock.Mary's basis in the Snell stock is $10,000.In exchange for her stock,Mary receives property with an $8,000 basis and a $15,000 FMV that is subject to a $3,000 mortgage.Mary also receives cash of $5,000.What is Mary's recognized gain?