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Chapter 19 Corporate Formation, Reorganization, and Liquidation

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Question;Chapter 19;Corporate Formation, Reorganization, and Liquidation;True / False Questions;1. Gain or;loss is always recognized when realized for tax purposes.;True False;2. Generally;before gain or loss is realized for tax purposes, the taxpayer must engage in a;transaction.;True False;3. A;taxpayer's tax basis in property always begins with its cost to the taxpayer.;True False;4. Maria;defers $100 of gain realized in a section 351 transaction. The stock she;receives in the exchange has a fair market value of $500. Maria's tax basis in;the stock will be $400.;True False;5. Control;as it relates to a section 351 transaction is strictly defined to be 80 percent;or more of the voting power of the stock of the corporation to which property;is transferred.;True False;6. The;definition of property as it relates to a section 351 transaction includes;money.;True False;7. To meet;the control test under section 351, a taxpayer transferring property to a;corporation must own 80 percent or more of the corporation's voting stock and;80 percent of each class of nonvoting stock after the transfer.;True False;8. Gain and;loss realized in a section 351 transaction will be recognized if the taxpayer;receives boot in the exchange.;True False;9. A;taxpayer must receive voting common stock to be eligible for deferral in a;section 351 exchange.;True False;10. A taxpayer;always will have a tax basis in boot received in a section 351 transaction;equal to its fair market value.;True False;11. M;Corporation assumes a $200 liability attached to property transferred to it by;Jane in a section 351 transaction. The assumed liability will be treated as;boot received by Jane.;True False;12. Mandel;transferred property to his new corporation in a section 351 transaction. One;of the properties transferred was land with a fair market value of $200,000 and;a tax basis of $250,000. The corporation will always take a tax basis in the;land of $200,000 to prevent the "built-in loss" from being;transferred from Mandel to the corporation.;True False;13. Han;transferred land to his corporation in a section 351 transaction. Han had held;the land for two years prior to the transfer. The corporation will tack Han's;holding period for the land.;True False;14. A Type A;reorganization deals with the transfer of assets by the target corporation in a;merger.;True False;15. Tax;considerations always are the primary reason for how an acquisition is;structured.;True False;16. A section;338 transaction is a stock acquisition that is treated as an asset acquisition;based on an election made by the acquirer.;True False;17. Continuity;of interest as it relates to a tax reorganization focuses on the aggregate;equity received by the shareholders of the target corporation in the;transaction.;True False;18. The;shareholders in the target corporation always receive a tax basis in the stock;received from the acquirer equal to the stock's fair market value.;True False;19. The;requirements for tax deferral in a forward triangular merger and a reverse;triangular merger are the same.;True False;20. A;stock-for-stock Type B reorganization will be tax-deferred to a target;corporation shareholder as long as at least 80 percent of the consideration;received is in the form of stock of the acquirer.;True False;21. A;shareholder will own the same percentage of stock in the distributing;corporation under both a spin-off and a split-off of a subsidiary.;True False;22. A;liquidation of a corporation always is a taxable event to the shareholders of;the liquidated corporation.;True False;23. The tax;basis of property received by a noncorporate shareholder in a complete;liquidation will be the property's fair market value.;True False;24. A;liquidated corporation always recognizes gain realized in a complete;liquidation.;True False;25. A;liquidated corporation always recognizes loss realized in a complete;liquidation where none of the shareholders is a corporation.;True False;Multiple Choice Questions;26. Which;statement best describes the concept of realization as it applies to gain or;loss?;A. Realization;is the recording of gain or loss on a tax return.;B. Realization;is the result of an exchange of property rights in a transaction.;C. Realization;is the excess of amount realized over adjusted basis.;D. Realization;is the excess of adjusted basis over amount realized.;27. Which of;the following amounts is not included in the computation of amount realized in;an exchange?;A. Cash;received;B. Fair;market value of property received;C. Selling;expenses;D. Adjusted;basis of property transferred;28. Which of;the following amounts is not included in the computation of a property's;adjusted basis in an exchange?;A. Selling;expenses incurred by the buyer;B. Acquisition;cost of the buyer;C. Capital;improvements made to the property by the buyer;D. Depreciation;of the property by the buyer;29. Which of;the following statements best describes the tax law approach to recognizing;gain or loss realized in an exchange?;A. Gain and;loss realized is not recognized unless specifically stated otherwise in the;Internal Revenue Code.;B. Gain and;loss realized is recognized unless specifically stated otherwise in the;Internal Revenue Code.;C. Gain;realized is recognized unless specifically stated otherwise in the Internal;Revenue Code, but loss realized is not recognized unless specifically stated;otherwise in the Internal Revenue Code.;D. Loss;realized is recognized unless specifically stated otherwise in the Internal;Revenue Code, but gain realized is not recognized unless specifically stated;otherwise in the Internal Revenue Code.;30. Which of;the following requirements do not have to be met in a section 351 transaction?;A. Each;transferor of property must receive stock equal to at least 80 percent of the;fair market value of the property transferred.;B. In the;aggregate, the transferors of property to the corporation must collectively;control the corporation immediately after the transfers.;C. Only;property transferred to a corporation is eligible for deferral.;D. All;transfers of property to a corporation must be made simultaneously to qualify;for deferral.;31. Roberta;transfers property with a tax basis of $400 and a fair market value of $500 to;a corporation in exchange for stock with a fair market value of $350 in a;transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $150 on the property transferred. What is the amount realized;by Roberta in the exchange?;A. $500;B. $400;C. $350;D. $250;32. Inez;transfers property with a tax basis of $200 and a fair market value of $300 to;a corporation in exchange for stock with a fair market value of $250 in a;transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $50 on the property transferred. What is the;corporation's tax basis in the property received in the exchange?;A. $150;B. $200;C. $250;D. $300;33. Antoine;transfers property with a tax basis of $500 and a fair market value of $600 to;a corporation in exchange for stock with a fair market value of $550 in a;transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $50 on the property transferred. What is Antoine's tax;basis in the stock received in the exchange?;A. $600;B. $550;C. $500;D. $450;34. Camille;transfers property with a tax basis of $800 and a fair market value of $1,200;to a corporation in exchange for stock with a fair market value of $850 and;$350 in a transaction that qualifies for deferral under section 351. Camille;also incurred selling expenses of $100. What is the amount realized by Camille;in the exchange?;A. $1,200;B. $1,100;C. $850;D. $750;35. Carlos;transfers property with a tax basis of $500 and a fair market value of $800 to;a corporation in exchange for stock with a fair market value of $650 and $50 in;a transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $100 on the property transferred. What is the;corporation's tax basis in the property received in the exchange?;A. $800;B. $600;C. $550;D. $450;36. Roy;transfers property with a tax basis of $800 and a fair market value of $500 to;a corporation in exchange for stock with a fair market value of $400 and $50 in;a transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $50 on the property transferred. What is Roy's tax basis;in the stock received in the exchange?;A. $800;B. $750;C. $700;D. $500;37. Casey;transfers property with a tax basis of $2,000 and a fair market value of $5,000;to a corporation in exchange for stock with a fair market value of $4,000 and;$400 in a transaction that qualifies for deferral under section 351. The;corporation assumed a liability of $600 on the property transferred. Casey also;incurred selling expenses of $300. What is the amount realized by Casey in the;exchange?;A. $5,000;B. $4,700;C. $4,600;D. $4,200;38. Tristan;transfers property with a tax basis of $900 and a fair market value of $1,200;to a corporation in exchange for stock with a fair market value of $900 and;$200 in a transaction that qualifies for deferral under section 351. The;corporation assumed a liability of $100 on the property transferred. What is;the corporation's tax basis in the property received in the exchange?;A. $1,200;B. $1,100;C. $1,000;D. $900;39. Sybil;transfers property with a tax basis of $5,000 and a fair market value of $6,000;to a corporation in exchange for stock with a fair market value of $3,000 and;$2,000 in a transaction that qualifies for deferral under section 351. The;corporation assumed a liability of $1,000 on the property transferred. What is;Sybil's tax basis in the stock received in the exchange?;A. $6,000;B. $5,000;C. $4,000;D. $3,000;40. Ashley;transfers property with a tax basis of $5,000 and a fair market value of $3,000;to a corporation in exchange for stock with a fair market value of $2,000 and;$500 in a transaction that qualifies for deferral under section 351. The;corporation assumed a liability of $500 on the property transferred. What is;Ashley's tax basis in the stock received in the exchange?;A. $5,000;B. $4,000;C. $3,000;D. $2,000;41. Rachelle;transfers property with a tax basis of $800 and a fair market value of $900 to;a corporation in exchange for stock with a fair market value of $750 and $50 in;a transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $100 on the property transferred. What is Rachelle's tax;basis in the stock received in the exchange?;A. $900;B. $850;C. $750;D. $700;42. Rachelle;transfers property with a tax basis of $800 and a fair market value of $900 to;a corporation in exchange for stock with a fair market value of $750 and $50 in;a transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $100 on the property transferred. What is the;corporation's tax basis in the property received in the exchange?;A. $900;B. $850;C. $800;D. $750;43. Which of;the following statements best describes the concept of control as it applies to;a section 351 transaction?;A. Control;is defined as the ownership of 80 percent or more of a corporation's voting;stock.;B. Control;is defined as the ownership of 80 percent or more of the fair market value of a;corporation's stock.;C. Control;is defined as the ownership of 80 percent or more of a corporation's voting;stock and 80 percent or more of the fair market value of a corporation's stock.;D. Control;is defined as the ownership of 80 percent or more of a corporation's voting stock;and 80 percent or more of the total number of shares of each class of nonvoting;stock.;44. Which of;the following class of stock is not allowed to be used in a section 351;transaction?;A. Voting;common stock;B. Voting;preferred stock;C. Nonvoting;preferred stock;D. All of;these classes of stock can be used in a section 351 transaction.;45. Which of;the following statements best describes the impact of receiving boot in a;section 351 transaction?;A. Boot;received has no impact on the recognition of gain or loss realized in a section;351 transaction.;B. Boot;received causes gain realized to be recognized, but not loss realized.;C. Boot;received causes loss realized to be recognized, but not gain realized.;D. Boot;received causes gain and loss realized to be recognized.;46. Sami;transferred property with a fair market value of $600 and a tax basis of $300;to a corporation in exchange for stock with a fair market value of $600. In;addition, Sami received stock with a fair market value of $50 in exchange for;services she provided to the corporation in the incorporation process. Which of;the following statements best describes the tax result to Sami because of the;exchanges?;A. Sami will;recognize $50 of compensation income, but she can count the shares of stock she;receives in exchange for services in determining if the control test is met;under section 351.;B. Sami will;recognize $50 of compensation income, but she cannot count the shares of stock;she receives in exchange for services in determining if the control test is met;under section 351.;C. Sami will;not recognize $50 of compensation income, but she can count the shares of stock;she receives in exchange for services in determining if the control test is met;under section 351.;D. Sami will;not recognize $50 of compensation income, and she cannot count the shares of;stock she receives in exchange for services in determining if the control test;is met under section 351.;47. Amy;transfers property with a tax basis of $900 and a fair market value of $600 to;a corporation in exchange for stock with a fair market value of $450 in a;transaction that qualifies for deferral under section 351. The corporation;assumed a liability of $150 on the property transferred. What is Amy's tax;basis in the stock received in the exchange?;A. $900;B. $750;C. $650;D. $450;48. Which of;the following statements best describes the tax results to a shareholder in a;section 351 transaction when liabilities on property transferred to the;corporation are assumed by the corporation?;A. Liabilities;assumed by a corporation on a section 351 transfer are always treated as boot.;B. Liabilities;assumed by a corporation on a section 351 transfer are never treated as boot.;C. Liabilities;assumed by a corporation on a section 351 transfer are treated as boot if the;total liabilities assumed exceed the total basis of the assets transferred.;D. Liabilities;assumed by a corporation on a section 351 transfer are treated as boot if there;is no business purpose for the assumption of the liabilities by the corporation.;49. Which of;the following statements best describes the "built-in loss" rules;that apply to property transferred to a corporation under section 351?;A. If the;basis of a property transferred to a corporation under section 351 exceeds its;fair market value, the corporation will always take a tax basis in the property;equal to the property's fair market value.;B. If the;basis of a property transferred to a corporation under section 351 exceeds its;fair market value, the corporation will always take a tax basis in the property;equal to the property's tax basis in the hands of the shareholder.;C. If the;aggregate basis of all property transferred to a corporation under section 351;exceeds its aggregate fair market value, the aggregate tax basis of the;property in the hands of the corporation cannot exceed the aggregate fair;market value of the property.;D. If the;aggregate basis of all property transferred to a corporation under section 351;exceeds its aggregate fair market value, the aggregate tax basis of the;property in the hands of the corporation cannot exceed the aggregate tax basis;of the property.;50. Which of;the following statements best describes the tax consequences that arise from a;contribution of capital to a corporation by an existing shareholder?;A. The;shareholder recognizes gain and loss on the transfer and the corporation's;basis in the property transferred equals its fair market value.;B. The;shareholder does not recognize gain and loss on the transfer and the;corporation's basis in the property transferred equals the shareholder's basis;in the property transferred.;C. The;shareholder recognizes gain and loss on the transfer and the corporation's;basis in the property transferred equals the shareholder's basis in the;property transferred.;D. The;shareholder does not recognize gain and loss on the transfer and the;corporation's basis in the property transferred equals zero.;51. Which of;the following statements best describes the tax benefits that arise from the;sale of section 1244 stock?;A. Section;1244 allows an individual shareholder to exempt gain from sale of the stock;from tax.;B. Section;1244 allows an individual shareholder to deduct all of the loss from sale of;the stock as an ordinary loss in the year of the sale.;C. Section;1244 allows an individual shareholder to deduct up to $50,000 of the loss from;sale of the stock as an ordinary loss in the year of the sale.;D. Section;1244 allows a corporate shareholder to deduct up to $50,000 of the loss from;sale of the stock as an ordinary loss in the year of the sale.;52. Which of;the following statements does not describe a motivation by the buyer or seller;in the acquisition or sale of a company?;A. Buyers;generally prefer to buy assets because they can take a tax basis in the assets;acquired equal to the assets' fair market value.;B. Buyers;generally prefer to buy stock because they can take a tax basis in the;underlying assets of the company acquired equal to the assets' fair market;value.;C. Sellers;generally prefer to sell assets in a tax-deferred reorganization to avoid;higher tax rates imposed on gains from the sale of non-capital assets.;D. Sellers;generally prefer to sell stock because they can recognize capital gain on the;sale taxed at preferential rates.;53. Which of;the following statements best describes a section 338 transaction?;A. A section;338 transaction is an election made by the buyer to treat a stock acquisition;as an asset acquisition.;B. A section;338 transaction is an election made by the buyer to treat an asset acquisition;as a stock acquisition.;C. A section;338 transaction is an election made by the seller to treat a stock acquisition;as an asset acquisition.;D. A section;338 transaction is an election made by the seller to treat an asset acquisition;as a stock acquisition.;54. Which of;the following statements best describes the tax consequences of a section 338;election?;A. Gain or;loss is recognized by the acquired corporation on the deemed sale of its assets;and the buyer gets a stepped-up basis in the assets acquired.;B. Gain or;loss is recognized by the acquired corporation on the deemed sale of its assets;and the buyer gets a carryover basis in the assets acquired.;C. Gain or;loss is not recognized by the acquired corporation on the deemed sale of its;assets and the buyer gets a stepped-up basis in the assets acquired.;D. Gain or;loss is not recognized by the acquired corporation on the deemed sale of its;assets and the buyer gets a carryover basis in the assets acquired.;55. Which of;the following statements best describes the continuity of interest principle as;it applies to a tax-deferred acquisition?;A. Continuity;of interest requires each shareholder to receive at least 40 percent of the;consideration received in equity of the acquirer.;B. Continuity;of interest requires shareholders in the aggregate to receive at least 40;percent of the consideration received in equity of the acquirer.;C. Continuity;of interest requires each shareholder to receive at least 80 percent of the;consideration received in equity of the acquirer.;D. Continuity;of interest requires shareholders in the aggregate to receive at least 80;percent of the consideration received in equity of the acquirer.;56. Which of;the following principles does not need to be satisfied for an acquisition to be;a tax-deferred reorganization?;A. Continuity;of interest;B. Continuity;of purpose;C. Business;purpose;D. Continuity;of business enterprise;57. Which of;the following statements best describes the application of the continuity of;enterprise principle to a Type A tax-deferred reorganization?;A. The;continuity of business enterprise principle must be satisfied for both the;acquirer and the target corporation.;B. The;continuity of business enterprise principle must be satisfied for only the;target corporation.;C. The;continuity of business enterprise principle must be satisfied for only the;acquirer.;D. The;continuity of business enterprise principle does not have to be satisfied as;long as the business purpose principle is satisfied.;58. Simone;transferred 100 percent of her stock in Purple Company to Plum Corporation in a;Type A merger. In exchange, she received stock in Plum with a fair market value;of $500,000 plus $500,000 in cash. Simone's tax basis in the Purple stock was;$200,000. What amount of gain does Simone recognize in the exchange and what is;her basis in the Plum stock she receives?;A. $800,000;gain recognized and a basis in Plum stock of $1,000,000;B. $800,000;gain recognized and a basis in Plum stock of $500,000;C. $500,000;gain recognized and a basis in Plum stock of $500,000;D. $500,000;gain recognized and a basis in Plum stock of $200,000;59. Jamie;transferred 100 percent of her stock in Fox Company to Otter Corporation in a;Type A merger. In exchange, she received stock in Otter with a fair market;value of $400,000 plus $600,000 in cash. Jamie's tax basis in the Fox stock was;$600,000. What amount of gain does Jamie recognize in the exchange and what is;her basis in the Otter stock she receives?;A. $400,000;gain recognized and a basis in Otter stock of $400,000;B. $600,000;gain recognized and a basis in Otter stock of $400,000;C. $400,000;gain recognized and a basis in Otter stock of $600,000;D. $600,000;gain recognized and a basis in Otter stock of $600,000;60. Jasmine;transferred 100 percent of her stock in Woodward Company to Jefferson;Corporation in a Type A merger. In exchange, she received stock in Jefferson;with a fair market value of $600,000 plus $400,000 in cash. Jasmine's tax basis;in the Woodward stock was $1,500,000. What amount of loss does Jasmine;recognize in the exchange and what is her basis in the Jefferson stock she;receives?;A. $500,000;loss recognized and a basis in Jefferson stock of $600,000;B. $500,000;loss recognized and a basis in Jefferson stock of $1,100,000;C. No loss;recognized and a basis in Jefferson stock of $1,500,000;D. No loss;recognized and a basis in Jefferson stock of $1,100,000;61. Celeste;transferred 100 percent of her stock in Supply Chain Company to Marketing;Corporation in a Type A merger. In exchange, she received stock in Marketing;with a fair market value of $500,000 plus $500,000 in cash. Celeste's tax basis;in the Supply Chain stock was $1,200,000. What amount of loss does Celeste;recognize in the exchange and what is her basis in the Marketing stock she;receives?;A. $200,000;loss recognized and a basis in Marketing stock of $1,200,000;B. No loss;recognized and a basis in Marketing stock of $1,200,000;C. $200,000;loss recognized and a basis in Marketing stock of $700,000;D. No loss;recognized and a basis in Marketing stock of $700,000;62. Which of;the following statements does not describe a requirement that must be met in a;tax-deferred forward triangular merger?;A. The 40;percent continuity of interest test must be met with respect to the stock;transferred from the acquisition corporation to the target corporation;shareholders.;B. The;acquirer must hold substantially all of the target corporation's properties;after the merger.;C. The;continuity of business enterprise test must be met with respect to the target;corporation.;D. The;target corporation shareholders must receive voting stock in the acquiring;corporation.;63. Which of;the following statements does not describe a requirement that must be met in a;tax-deferred reverse triangular merger?;A. The 40;percent continuity of interest test must be met with respect to the stock;transferred from the acquisition corporation to the target corporation;shareholders.;B. The;target must hold substantially all of the target corporation's properties and;the properties of the acquisition subsidiary after the merger.;C. The;continuity of business enterprise test must be met with respect to the target;corporation.;D. The;target corporation shareholders must receive voting stock in the acquiring;corporation.;64. Which of;the following statements best describes the requirement that must be met in a;tax-deferred Type B stock-for-stock reorganization?;A. The 40;percent continuity of interest test must be met with respect to the stock;transferred from the acquisition corporation to the target shareholders.;B. The;acquiring corporation must hold substantially all of the target's properties;after the acquisition.;C. The;target corporation shareholders must receive "solely" voting stock in;the acquiring corporation in the exchange.;D. The;target corporation shareholders must receive voting stock in the acquiring;corporation in exchange for 80 percent or more of the target corporation stock.;65. Juan;transferred 100 percent of his stock in Rosa Company to Azul Corporation in a;Type B stock-for-stock exchange. In exchange, he received stock in Azul with a;fair market value of $1,000,000. Juan's tax basis in the Rosa stock was;$400,000. What amount of gain does Juan recognize in the exchange and what is;his basis in the Azul stock he receives?;A. $600,000;gain recognized and a basis in Azul stock of $400,000;B. No gain;recognized and a basis in Azul stock of $400,000;C. $600,000;gain recognized and a basis in Azul stock of $1,000,000;D. No gain;recognized and a basis in Azul stock of $1,000,000;66. Julian;transferred 100 percent of his stock in Lemon Company to Apricot Corporation in;a Type B stock-for-stock exchange. In exchange, he received stock in Apricot;with a fair market value of $200,000. Julian's tax basis in the Lemon stock was;$400,000. What amount of loss does Julian recognize in the exchange and what is;his basis in the Apricot stock he receives?;A. $200,000;loss recognized and a basis in Apricot stock of $200,000;B. No loss;recognized and a basis in Apricot stock of $400,000;C. $200,000;loss recognized and a basis in Apricot stock of $400,000;D. No loss;recognized and a basis in Apricot stock of $200,000;67. Which of;the following statements does not describe a tax consequence to shareholders in;a complete liquidation?;A. All;complete liquidations are taxable to the shareholders.;B. Complete;liquidations are taxable to all individual shareholders.;C. Complete;liquidations are taxable to all corporate shareholders owning stock of the;liquidated corporation representing less than 80 percent or more of voting;power and value.;D. Complete;liquidations are tax deferred to corporate shareholders owning stock of the;liquidated corporation representing 80 percent or more of voting power and;value.;68. Jalen;transferred his 10 percent interest to Wolverine Company as part of a complete;liquidation of the company. In the exchange, he received land with a fair;market value of $100,000. Jalen's basis in the Wolverine stock was $50,000. The;land had a basis to Wolverine Company of $80,000. What amount of gain does;Jalen recognize in the exchange and what is his basis in the land he receives?;A. $50,000;gain recognized and a basis in the land of $100,000;B. $50,000;gain recognized and a basis in the land of $80,000;C. No gain;recognized and a basis in the land of $80,000;D. No gain;recognized and a basis in the land of $50,000;69. Red;Blossom Corporation transferred its 40 percent interest to Tea Company as part;of a complete liquidation of the company. In the exchange, Red Blossom received;land with a fair market value of $500,000. The corporation's basis in the Tea;Company stock was $300,000. The land had a basis to Tea Company of $600,000.;What amount of gain does Red Blossom recognize in the exchange and what is its;basis in the land it receives?;A. $200,000;gain recognized and a basis in the land of $600,000;B. $200,000;gain recognized and a basis in the land of $500,000;C. No gain;recognized and a basis in the land of $600,000;D. No gain;recognized and a basis in the land of $300,000;70. Paladin;Corporation transferred its 90 percent interest to Furman Company as part of a;complete liquidation of the company. In the exchange, Paladin received land;with a fair market value of $1,000,000. The corporation's basis in the Furman;Company stock was $400,000. The land had a basis to Furman Company of $200,000.;What amount of gain does Paladin recognize in the exchange and what is its;basis in the land it receives?;A. $600,000;gain recognized and a basis in the land of $1,000,000;B. $600,000;gain recognized and a basis in the land of $400,000;C. No gain;recognized and a basis in the land of $400,000;D. No gain;recognized and a basis in the land of $200,000;71. Katarina;transferred her 10 percent interest to Spartan Company as part of a complete;liquidation of the company. In the exchange, she received land with a fair;market value of $200,000. Katarina's basis in the Spartan stock was $100,000.;The land had a basis to Spartan Company of $50,000. What amount of gain does;Spartan recognize in the exchange and what is Katarina's basis in the land she;receives?;A. $100,000;gain recognized by Spartan and a basis in the land of $200,000;B. $150,000;gain recognized by Spartan and a basis in the land of $200,000;C. No gain;recognized by Spartan and a basis in the land of $100,000;D. No gain;recognized by Spartan and a basis in the land of $50,000;72. Which of;the following statements best describes the recognition of loss on property;transferred to shareholders in complete liquidation of a corporation?;A. The;liquidated corporation always recognizes loss on the distribution of property;in complete liquidation of the corporation.;B. The;liquidated corporation never recognizes loss on the distribution of property in;complete liquidation of the corporation.;C. The;liquidated corporation recognizes loss on the distribution of property in;complete liquidation of the corporation if the property is distributed to;individuals who are not related parties to the corporation.;D. The;liquidated corporation recognizes loss on the distribution of property in;complete liquidation of the corporation only if the property is distributed to;individuals who are related parties to the corporation.;73. Billie;transferred her 20 percent interest to Jean Company as part of a complete;liquidation of the company. In the exchange, she received land with a fair;market value of $200,000. Billie's basis in the Jean stock was $100,000. The;land had a basis to Jean Company of $400,000. What amount of loss does Jean;recognize in the exchange and what is Billie's basis in the land she receives?;Billie is not considered a related party to Jean Company.;A. $200,000;loss recognized by Jean and a basis in the land of $200,000;B. $200,000;loss recognized by Jean and a basis in the land of $400,000;C. No loss;recognized by Jean and a basis in the land of $200,000;D. No loss;recognized by Jean and a basis in the land of $400,000;74. Robin;transferred her 60 percent interest to Cardinal Company as part of a complete;liquidation of the company. In the exchange, she received land with a fair;market value of $800,000. Robin's basis in the Cardinal stock was $900,000. The;land had a basis to Cardinal Company of $1,000,000. What amount of loss does;Cardinal recognize in the exchange and what is Robin's basis in the land she;receives? The distribution was non pro rata to Robin, a related person.;A. $200,000;loss recognized by Cardinal and a basis in the land of $1,000,000;B. $200,000;loss recognized by Cardinal and a basis in the land of $800,000;C. No loss;recognized by Cardinal and a basis in the land of $1,000,000;D. No loss;recognized by Cardinal and a basis in the land of $800,000;75. Packard;Corporation transferred its 100 percent interest to State Company as part of a;complete liquidation of the company. In the exchange, Packard received land;with a fair market value of $300,000. Packard's basis in the State stock was;$600,000. The land had a basis to State Company of $500,000. What amount of;loss does State recognize in the exchange and what is Packard's basis in the;land it receives?;A. $200,000;loss recognized by State and a basis in the l

 

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