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What information is necessary to determine the tax consequences to X Corporation and A

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solution


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1.The special tax treatment of corporate reorganization offers an opportunity to engage in tax free transaction with the common result there is permanent elimination investor gain or loss.;Select one;True;False;2. X corporation is liquidated distributing land to A (and individual), the sole shareholder of the corporation.;What information is necessary to determine the tax consequences to X Corporation and A?;Select one;a. Fair market value of land;b. Adjusted basis of the land;c. A's adjusted basis in the X corporation stock;d. All of the above;3.When a corporation is liquidated, the shareholder must report dividend income to the extent of available earnings and profits.;Select one;True;False;4. X Corporation purchased land 5 years ago for $450,000. The corporation is being liquidated when the land is worth $300,000. The land will be distributed to A (the 60% shareholder with stock adjusted basis of $450,000). B (40% shareholder with stock adjusted basis of $600,000) will get cash of $200,000.;The following are the tax consequences of the liquidation.;Select one;a. B reports dividend of $200,000;b. A reports a loss of $150,000;c. X Corporation reports no loss on distribution of land;d. b. and c. are correct;e. none of the above;5. If a liquidation qualifies under Section 332 (parent / subsidiary liquidation), none of the shareholders report gain or loss as a result of the liquidation.;Select one;True;False;6.The following facts describe a liquidation of a corporation 100% owned by an individual. For purposes of calculation assume a high bracket individual taxpayer and a marginal corporate tax rate of 35%;Assets of liquidating corporation;Fair market value = $500,000;Adjusted basis = $100,000;Corporate liabilities before liquidation = $160,000;Shareholder's adjusted basis in stock = 80,000;How much gain does the shareholder report?;Shareholder;Select one;a. $280,000;b. $420,000;c. $120,000;d. None of the above;7.X corporation is liquidated distributing cash to A (and individual), the sole shareholder of the corporation.;What information is necessary to determine the tax consequences to A?;Select one;a.Earnings and profits of X corporation;b.Details regarding when the plan of liquidation was adopted.;c.A's adjusted basis in the stock;d.All of the above;8. Federal income tax paid by the liquidating corporation related to a liquidation reduces the distribution to the shareholders and therefore indirectly reduces any gain reported by the shareholders in liquidation.;Select one;True;False;9.;From the perspective of the distributing corporation, the tax treatment of the distribution of non-cash assets is the same for liquidating and non-liquidating distributions. Gain or loss is recognized. (Hint: Losses can be recognized in a complete liquidation.);Select one;True;False;10.A Corporation owns 100% of the stock of B Corporation. The following information is needed to determine the tax consequences of liquidating B Corporation.;Select one;a.Adjusted basis of B Corporation stock owned by A Corporation.;b.The earnings and profits of A Corporation;c.The date A Corporation acquired stock of B Corporation;d.a. and c.;e.None of the above

 

Paper#20927 | Written in 18-Jul-2015

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