Exam 6: Corporate Liquidating Distributions

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.

Under the general liquidation rules,Missouri Corporation is liquidated,with Jefferson receiving $5,000 in cash plus other property having a $6,000 FMV and assuming a $2,000 mortgage on the property.Jefferson's basis in his Missouri stock is $8,000.What is Jefferson's amount realized and gain or loss recognized on the liquidation?

Penny,a cash-basis taxpayer,reported a $15,000 long-term capital gain on the exchange of her Midwest Corporation stock when the corporation liquidated in 2012.Midwest subsequently lost a lawsuit and Penny paid an additional $3,000 in 2014 as her part of the settlement.What are the tax consequences to Penny in 2014 of the $3,000 additional payment she made?

Market Corporation owns 100% of Subsidiary Corporation's stock.Market Corporation completely liquidates Subsidiary Corporation,receiving land with a $400,000 adjusted basis and a $500,000 FMV in exchange for Subsidiary stock,which has a $300,000 adjusted basis.Market Corporation has a basis in the land of

Identify which of the following statements is true.

Under a plan of complete liquidation,Coast Corporation distributes land with a $300,000 adjusted basis and a $400,000 FMV to William,a 25% shareholder.William has a $200,000 basis in his Coast stock.The land is inventory in the hands of Coast Corporation.Coast Corporation must recognize

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?

Identify which of the following statements is true.

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

In a complete liquidation,a liability assumed by a shareholder reduces the shareholder's amount realized.

How is the gain/loss calculated if a shareholder has acquired stock at different times and at varying prices?

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

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?

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?

What attributes of a controlled subsidiary corporation are carried over to the parent when the subsidiary is liquidated?

The liquidation of a subsidiary corporation must be completed within one tax year to receive nonrecognition treatment.

Hope Corporation was liquidated four years ago.Teresa reported a $40,000 long-term capital gain due to the liquidation on her individual tax return.This year,Teresa pays $6,000 as part of the settlement of a lawsuit against Hope.Due to the $6,000 payment,Teresa recognizes a

Identify which of the following statements is false.

Identify which of the following statements is true.

When a liquidating corporation pays off an unsecured debt obligation,