Exam 6: Corporate Liquidating Distributions

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 a $80,000 mortgage,which Marty assumes.Marty's basis in the Robot stock surrendered is $50,000.Marty must recognize

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?

Charlene and Dennis each own 50% of Brewster Corporation and have owned it for five years.The adjusted bases of their Brewster stock are $80,000 and $40,000 respectively.Brewster Corporation liquidates and distributes $60,000 to Charlene in exchange for her stock.It distributes a parcel of land with a $140,000 FMV which is subject to a $90,000 mortgage to Dennis in exchange for his stock.Dennis assumes the mortgage and also receives $10,000 in cash. a)What is the character and amount of each shareholder's gain or loss? b)What is each shareholder's basis in the property received in the liquidation?

In a complete liquidation of a corporation,which of the following is false?

Parent Corporation,which operates an electric utility,created a 100%-owned corporation,Subsidiary that built and managed an office building.Assume the two corporations have filed separate tax returns for a number of years.The utility occupied two floors of the office building,and Subsidiary offered the other ten floors for lease.Only 25% of the total rental space was leased because of the high crime rate in the area surrounding the building.Rental income was insufficient to cover the mortgage payments,and Subsidiary filed for bankruptcy because of the poor prospects.Subsidiary's assets were taken over by the mortgage lender.Parent lost its entire $500,000 investment.At the time Subsidiary was liquidated,another $100,000 of debts remained unpaid for the general creditors,which included a $35,000 account payable to Parent.What tax issues should Parent and Subsidiary consider with respect to the bankruptcy and liquidation of Subsidiary?

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.

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

Identify which of the following statements is true.

Identify which of the following statements is true.

What is the IRS's position regarding whether a liquidating transaction will be considered open or closed?

When a subsidiary corporation is liquidated into its parent corporation under a formal plan of liquidation,the distributions must take place within

The general rule for tax attributes of liquidating corporations is

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

What are the tax consequences to Parent Corporation when Parent Corporation,which owns 75% of Subsidiary Corporation's single class of stock,purchases for cash the remaining 25% of the Subsidiary stock from three individual shareholders pursuant to a tender offer? Three months later as part of an approved plan of liquidation,Subsidiary's assets all distributed to Parent Corporation in exchange for all of Subsidiary's outstanding stock.

Carly owns 25% of Base Corporation's single class of stock and Premier Corporation owns the remaining 75%.Carly's basis in the Base stock is $200,000 and Premier Corporation's basis in the Base stock is $600,000.Carly receives property with a $175,000 adjusted basis and a $250,000 FMV and Premier Corporation receives property with a $600,000 adjusted basis and a $750,000 FMV in complete liquidation of Base Corporation.All of Base's cash is used to pay its liabilities.Which of following statements is correct concerning the tax effects of the liquidation?

During 2013,Track Corporation distributes property to Cindy as part of a complete liquidation.Property included in the distribution is $30,000 in cash,land with a $40,000 adjusted basis and a $60,000 FMV,and a copyright without an ascertainable FMV and having a zero basis.The first payment to Cindy of $8,000 for use of the copyrighted property occurs in 2014.Cindy has a basis in the Track stock of $95,000 immediately preceding the liquidation.The minimum amount of gain that Cindy must recognize is a

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?

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