Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

The adjusted basis of property received in a complete liquidation is its fair market value on the distribution date.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

The stock of Cooper Corporation is 70% owned by Carole and 30% owned by Carole's brother,Chris.During 2013,Chris transferred property (basis of $100,000 and FMV of $120,000)as a contribution to the capital of Cooper.During February 2014,Cooper adopted a plan of liquidation and subsequently made a pro rata distribution of the property back to Carole and Chris.At the time of the liquidation,the property had an FMV of $80,000.What amount of loss can be recognized by Cooper on the distribution of property?

Accepted Answer

A)  $0 
B)  $6,000 
C)  $12,000 
D)  $20,000 
A)  $0 
B)  $6,000 
C)  $12,000 
D)  $20,000

Question 7

A liquidation must be reported to the Internal Revenue Service on Form 966

Accepted Answer

A)  within 60 days of the adoption of a plan of liquidation. 
B)  that is filed with the national IRS office. 
C)  whether the shareholders' realized gain is recognized or not. 
D)  by the shareholders. 
A)  within 60 days of the adoption of a plan of liquidation. 
B)  that is filed with the national IRS office. 
C)  whether the shareholders' realized gain is recognized or not. 
D)  by the shareholders.

Question 8

When a liquidating corporation pays off an unsecured debt obligation,

Accepted Answer

A)  the corporation recognizes no gain or loss if it uses appreciated property. 
B)  the corporation recognizes no gain or loss if it uses cash. 
C)  the corporation recognizes any gains but not losses realized. 
D)  the corporation recognizes losses but not gains realized. 
A)  the corporation recognizes no gain or loss if it uses appreciated property. 
B)  the corporation recognizes no gain or loss if it uses cash. 
C)  the corporation recognizes any gains but not losses realized. 
D)  the corporation recognizes losses but not gains realized.

Question 9

New York Corporation adopts a plan of liquidation on March 15 and shortly thereafter sells a parcel of land on which it realizes a $15,000 gain (excluding the effects of a $2,000 sales commission).New York pays its legal counsel $500 to draft the plan of liquidation.All of New York's remaining properties are distributed to its shareholders on September 15.What are the tax consequences to New York on the land sale?

Accepted Answer

New York has a recognized gain

Question 10

Robot Corporation is liquidated,with Marty receiving property having an adjusted basis of $60,000 and an FMV of $90,000.The property is subject to an $80,000 mortgage,which Marty assumes.Marty's basis in the Robot stock surrendered is $50,000.Marty must recognize

Accepted Answer

A)  a $40,000 loss. 
B)  no gain or loss. 
C)  a $60,000 gain. 
D)  none of the above 
A)  a $40,000 loss. 
B)  no gain or loss. 
C)  a $60,000 gain. 
D)  none of the above

Question 11

Identify which of the following statements is true.

Accepted Answer

A)  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. 
B)  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. 
C)  The liquidating corporation does not recognize gains and losses when making a distribution of nonmoney property. 
D)  All of the above are false. 
A)  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. 
B)  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. 
C)  The liquidating corporation does not recognize gains and losses when making a distribution of nonmoney property. 
D)  All of the above are false.

Question 12

Lake Corporation distributes a building used in its business to Sandy in exchange for all of her Lake stock.Sandy's basis in her stock is $30,000 and the property she receives has a $90,000 FMV.As part of the distribution,Sandy assumes a liability associated with the property of $65,000.The property's basis prior to the liquidating distribution was $25,000.What are the tax consequences of the distribution to Sandy? To Lake Corporation?

Accepted Answer

Sandy will recognize a $5,000 capital lo

Question 13

Property received in a corporate liquidation by a noncorporate shareholder has

Accepted Answer

A)  a basis equal to its basis on the liquidating corporation's books increased by any gain recognized by the shareholder upon receipt of the property. Its holding period includes the holding period of the shareholder's stock. 
B)  a basis equal to its basis on the liquidating corporation's books increased by any gain recognized by the shareholder upon receipt of the property. Its holding period commences on the day after the distribution date. 
C)  a basis equal to its FMV reduced by any liabilities assumed by the shareholder. Its holding period commences on the day after the distribution date. 
D)  a basis equal to its FMV. Its holding period commences on the day after the distribution date. 
A)  a basis equal to its basis on the liquidating corporation's books increased by any gain recognized by the shareholder upon receipt of the property. Its holding period includes the holding period of the shareholder's stock. 
B)  a basis equal to its basis on the liquidating corporation's books increased by any gain recognized by the shareholder upon receipt of the property. Its holding period commences on the day after the distribution date. 
C)  a basis equal to its FMV reduced by any liabilities assumed by the shareholder. Its holding period commences on the day after the distribution date. 
D)  a basis equal to its FMV. Its holding period commences on the day after the distribution date.

Question 14

Under what circumstances does a liquidating corporation not recognize a gain or loss when making a distribution?

Accepted Answer

A liquidating corporation does not recog

Question 15

Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation.Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year.The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation.As a result of the liquidation,Parent must recognize a

Accepted Answer

A)  $0 gain. 
B)  $200,000 gain. 
C)  $300,000 gain. 
D)  none of the above 
A)  $0 gain. 
B)  $200,000 gain. 
C)  $300,000 gain. 
D)  none of the above

Question 16

Are liquidation and dissolution the same? Explain your answer.

Accepted Answer

Liquidation status continues from the ti

Question 17

Riverwalk Corporation is liquidated,with Juan receiving $5,000 in money,other property having a $6,000 FMV,and a $1,000 mortgage on the property.Juan's basis in his River walk stock is $8,000.Upon liquidation,Juan must recognize a gain of

Accepted Answer

A)  0. 
B)  $2,000. 
C)  $3,000. 
D)  $11,000. 
A)  0. 
B)  $2,000. 
C)  $3,000. 
D)  $11,000.

Question 18

A plan of liquidation

Accepted Answer

A)  must be written. 
B)  details the steps to be undertaken in carrying out the liquidation. 
C)  must be a formal plan. 
D)  must be completed in one year. 
A)  must be written. 
B)  details the steps to be undertaken in carrying out the liquidation. 
C)  must be a formal plan. 
D)  must be completed in one year.

Question 19

Last year,Toby made a capital contribution of a pretzel maker having a $2,000 adjusted basis and a $200 FMV to Keke Corporation in exchange for additional stock.This year,Keke Corporation adopted a plan of liquidation.Prior to the adoption of the liquidation plan,Keke had not used the pretzel maker in connection with the conduct of its trade or business.Which of the following statements is true?

Accepted Answer

A)  Keke Corporation may recognize a loss of $1,800. 
B)  Keke Corporation may recognize a loss of $200. 
C)  Keke Corporation's basis for determining the loss will be $2,000. 
D)  Keke Corporation's basis for determining the loss will be $200. 
A)  Keke Corporation may recognize a loss of $1,800. 
B)  Keke Corporation may recognize a loss of $200. 
C)  Keke Corporation's basis for determining the loss will be $2,000. 
D)  Keke Corporation's basis for determining the loss will be $200.

Question 20

In a Sec.332 liquidation,can a subsidiary corporation recognize losses on distributions to either the parent corporation or minority shareholders?

Accepted Answer

No.Section 332 liquidations are an excep

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

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?

The adjusted basis of property received in a complete liquidation is its fair market value on the distribution date.

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?

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

A liquidation must be reported to the Internal Revenue Service on Form 966

When a liquidating corporation pays off an unsecured debt obligation,

Robot Corporation is liquidated,with Marty receiving property having an adjusted basis of $60,000 and an FMV of $90,000.The property is subject to an $80,000 mortgage,which Marty assumes.Marty's basis in the Robot stock surrendered is $50,000.Marty must recognize

Identify which of the following statements is true.

Property received in a corporate liquidation by a noncorporate shareholder has

Under what circumstances does a liquidating corporation not recognize a gain or loss when making a distribution?

Are liquidation and dissolution the same? Explain your answer.

Riverwalk Corporation is liquidated,with Juan receiving $5,000 in money,other property having a $6,000 FMV,and a $1,000 mortgage on the property.Juan's basis in his River walk stock is $8,000.Upon liquidation,Juan must recognize a gain of

A plan of liquidation

In a Sec.332 liquidation,can a subsidiary corporation recognize losses on distributions to either the parent corporation or minority shareholders?

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

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters

Exam 6: Corporate Liquidating Distributions

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

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?

The adjusted basis of property received in a complete liquidation is its fair market value on the distribution date.

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?

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

A liquidation must be reported to the Internal Revenue Service on Form 966

When a liquidating corporation pays off an unsecured debt obligation,

Robot Corporation is liquidated,with Marty receiving property having an adjusted basis of $60,000 and an FMV of $90,000.The property is subject to an $80,000 mortgage,which Marty assumes.Marty's basis in the Robot stock surrendered is $50,000.Marty must recognize

Identify which of the following statements is true.

Property received in a corporate liquidation by a noncorporate shareholder has

Under what circumstances does a liquidating corporation not recognize a gain or loss when making a distribution?

Are liquidation and dissolution the same? Explain your answer.

Riverwalk Corporation is liquidated,with Juan receiving $5,000 in money,other property having a $6,000 FMV,and a $1,000 mortgage on the property.Juan's basis in his River walk stock is $8,000.Upon liquidation,Juan must recognize a gain of

A plan of liquidation

In a Sec.332 liquidation,can a subsidiary corporation recognize losses on distributions to either the parent corporation or minority shareholders?

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

US Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters