Question 1

The acquiring corporation in a "Type G" reorganization must reduce the tax attributes carried over to it to the extent of the ____________________ relief.

Accepted Answer

cancellati

Question 2

Liabilities generally are not considered boot in corporate reorganizations except in an acquisitive "Type D" when cash or other property is also used in the transaction.

Accepted Answer

A) True 
 B)False

Question 3

In corporate reorganizations,an acquiring corporation using property other than stock as consideration may recognize gains but not losses on the transaction.

Accepted Answer

A) True 
 B)False

Question 4

When a corporation has cancellation-of-debt relief in a "Type G" reorganization,the corporation reduces its benefits in tax attributes such as NOLs and business credits.

Accepted Answer

A) True 
 B)False

Question 5

Winner Corporation acquires all of Loser Corporation on January 1 of this year for $1 million when the Federal long-term tax-exempt rate was 4%.Two of the tax attributes that Winner found appealing are Loser's NOL of $100,000 and its negative E & P of $150,000.Before applying any of Loser's tax benefits,Winner has taxable income of $75,000 and E & P of $50,000.Winner pays a dividend of $100,000 to its shareholders.Assuming that taxable income is equal to the current year's E & P,how much of this dividend is taxable?

Accepted Answer

A) $100,000 is taxable. 
B) $85,000 is taxable. 
C) $50,000 is taxable. 
D) None is taxable. 
E) None of the above. 
A) $100,000 is taxable. 
B) $85,000 is taxable. 
C) $50,000 is taxable. 
D) None is taxable. 
E) None of the above.

Question 6

In a ____________________ divisive reorganization,some of the stock in the original entity is exchanged for stock in the new corporation.In a ____________________ divisive reorganization,the shareholders do not give up any of their original corporation stock to receive stock in the new corporation,whereas in a ____________________ divisive reorganization,the original distributing corporation disappears.

Accepted Answer

split-off,

Question 7

On March 1,Cream Corporation transfers all of its assets to Coffee Corporation in exchange for 10% of its common voting stock.At the time of the reorganization,Cream has assets valued at $4 million (basis of $3 million)and its earnings and profits account shows a deficit of $650,000.Coffee's earnings and profits as of March 1 were $420,000.Due to the reorganization,Coffee has an NOL for the current year of $150,000.Coffee still declares its usual dividends of $100,000,paid on April 30,August 31,and December 31 ($300,000 of total dividends).

Accepted Answer

The answer of On March 1,Cream Corporation transfers all of...

Question 8

Mars Corporation merges into Jupiter Corporation by exchanging all of its assets for 300,000 shares of Jupiter stock valued at $2 per share and $100,000 cash.Wanda,the sole shareholder of Mars,surrenders her Mars stock (basis $900,000)and receives all of the Jupiter stock transferred to Mars plus the $100,000.How does Wanda treat this transaction on her tax return?

Accepted Answer

A) Wanda recognizes a $100,000 gain.Her Jupiter stock basis is $900,000. 
B) Wanda recognizes a loss of $100,000.Her Jupiter stock basis is $800,000. 
C) Wanda recognizes a $100,000 gain.Her Jupiter stock basis is $700,000. 
D) Wanda realizes a $200,000 loss of which $100,000 is recognized.Her Jupiter stock basis is $1 million. 
E) None of the above. 
A) Wanda recognizes a $100,000 gain.Her Jupiter stock basis is $900,000. 
B) Wanda recognizes a loss of $100,000.Her Jupiter stock basis is $800,000. 
C) Wanda recognizes a $100,000 gain.Her Jupiter stock basis is $700,000. 
D) Wanda realizes a $200,000 loss of which $100,000 is recognized.Her Jupiter stock basis is $1 million. 
E) None of the above.

Question 9

The amount of gain recognized by a shareholder in a corporate reorganization is based on the shareholder's proportionate share of E & P.

Accepted Answer

A) True 
 B)False

Question 10

Lyon has 100,000 shares outstanding that are worth $10 per share.It uses 32% of its stock plus $80,000 to acquire Zebra Corporation in a "Type A" reorganization.Zebra's assets are valued at $400,000 and its accumulated earnings and profits are $25,000 at the time of the reorganization.The Lyon shares and cash are distributed to the Zebra shareholders as follows.Jake (owning 62.5% of Zebra)receives 18,000 shares (value $180,000)and $70,000.Kara (owning 37.5% of Zebra)receives 14,000 shares (value $140,000)and $10,000.Jake and Kara each recognize gains to the extent of the cash they received.What is the character of Jake's and Kara's gains?

Accepted Answer

If Jake had received only stock,he would

Question 11

The sound business purpose doctrine and § 269 have the same purpose of disallowing restructurings that are primarily for tax avoidance motives.

Accepted Answer

A) True 
 B)False

Question 12

In which type of reorganization could bonds and other liabilities be exchanged for stock and not be treated as boot?

Accepted Answer

A) A "Type G" reorganization. 
B) A "Type E" reorganization. 
C) An acquisitive "Type D" reorganization. 
D) A "Type A" consolidation. 
E) None of the above. 
A) A "Type G" reorganization. 
B) A "Type E" reorganization. 
C) An acquisitive "Type D" reorganization. 
D) A "Type A" consolidation. 
E) None of the above.

Question 13

An equity structure shift occurs when a(n)____________________ causes an ownership change of ____________________ percentage-points for any common shareholders owning at least 5%.A sale or issuance of stock can cause a(n)____________________ to take place.

Accepted Answer

tax-free r

Question 14

Burmese Corporation is interested in acquiring Javanese Corporation by transferring 30% of its stock for all of Javanese's assets valued at $500,000 (basis of $150,000)and its $200,000 of liabilities.Javanese has created $50,000 in general business research credits which it cannot use.Javanese concentrates on pharmaceutical research whereas Burmese manufactures sun glasses.Burmese uses a discount factor of 8% and the Federal applicable rate is 4%.Javanese will terminate after the restructuring.How will this transaction be treated for tax purposes?

Accepted Answer

A) Since Javanese has liabilities in excess of its basis,this excess will be taxable to Javanese. 
B) The most that Burmese can use of the general business credits in any year is $4,200. 
C) This transaction could qualify as a "Type A" or a "Type C" reorganization. 
D) All of the above. 
E) None of the above. 
A) Since Javanese has liabilities in excess of its basis,this excess will be taxable to Javanese. 
B) The most that Burmese can use of the general business credits in any year is $4,200. 
C) This transaction could qualify as a "Type A" or a "Type C" reorganization. 
D) All of the above. 
E) None of the above.

Question 15

Without evidence to the contrary,the IRS views transactions occurring within one year of a reorganization as part of the restructuring.

Accepted Answer

A) True 
 B)False

Question 16

The determination of whether a shareholder's gain qualifies for stock redemption treatment in a corporate reorganization is based on the reduction in the percentage of the stock held in the target corporation when compared to the percentage held in the acquiring corporation.

Accepted Answer

A) True 
 B)False

The acquiring corporation in a "Type G" reorganization must reduce the tax attributes carried over to it to the extent of the ____________________ relief.

Liabilities generally are not considered boot in corporate reorganizations except in an acquisitive "Type D" when cash or other property is also used in the transaction.

In corporate reorganizations,an acquiring corporation using property other than stock as consideration may recognize gains but not losses on the transaction.

When a corporation has cancellation-of-debt relief in a "Type G" reorganization,the corporation reduces its benefits in tax attributes such as NOLs and business credits.

The amount of gain recognized by a shareholder in a corporate reorganization is based on the shareholder's proportionate share of E & P.

The sound business purpose doctrine and § 269 have the same purpose of disallowing restructurings that are primarily for tax avoidance motives.

In which type of reorganization could bonds and other liabilities be exchanged for stock and not be treated as boot?

An equity structure shift occurs when a(n) causes an ownership change of percentage-points for any common shareholders owning at least 5%.A sale or issuance of stock can cause a(n) to take place.

Without evidence to the contrary,the IRS views transactions occurring within one year of a reorganization as part of the restructuring.

The determination of whether a shareholder's gain qualifies for stock redemption treatment in a corporate reorganization is based on the reduction in the percentage of the stock held in the target corporation when compared to the percentage held in the acquiring corporation.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 7: Corporations: Reorganizations

The acquiring corporation in a "Type G" reorganization must reduce the tax attributes carried over to it to the extent of the ____________________ relief.

Liabilities generally are not considered boot in corporate reorganizations except in an acquisitive "Type D" when cash or other property is also used in the transaction.

In corporate reorganizations,an acquiring corporation using property other than stock as consideration may recognize gains but not losses on the transaction.

When a corporation has cancellation-of-debt relief in a "Type G" reorganization,the corporation reduces its benefits in tax attributes such as NOLs and business credits.

The amount of gain recognized by a shareholder in a corporate reorganization is based on the shareholder's proportionate share of E & P.

The sound business purpose doctrine and § 269 have the same purpose of disallowing restructurings that are primarily for tax avoidance motives.

In which type of reorganization could bonds and other liabilities be exchanged for stock and not be treated as boot?

An equity structure shift occurs when a(n)____________________ causes an ownership change of ____________________ percentage-points for any common shareholders owning at least 5%.A sale or issuance of stock can cause a(n)____________________ to take place.

Without evidence to the contrary,the IRS views transactions occurring within one year of a reorganization as part of the restructuring.

The determination of whether a shareholder's gain qualifies for stock redemption treatment in a corporate reorganization is based on the reduction in the percentage of the stock held in the target corporation when compared to the percentage held in the acquiring corporation.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, operation, and Basis

Partnerships: Distributions, transfer of Interests, and Terminations

S: Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

An equity structure shift occurs when a(n) causes an ownership change of percentage-points for any common shareholders owning at least 5%.A sale or issuance of stock can cause a(n) to take place.