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Comprehensive Problem




Question;Comprehensive;Problem 16-54;Parent;Corporation purchased 75 percent of Subsidiary Corporation seven years ago;Subsidiary?s current balance sheet shows the following figures;Basis;Value;Demand;Deposit;$20,000;$20,000;IBM;Stock;$30,000;$50,000;Parking;Lot;$5,000;$30,000;Building;0;$100,000;Mortgage;($15,000);($15,000);Subsidiary;has a net operating loss carryover of $7,000 and earnings and profits of;$22,000.;Subsidiary;redeems Roy Ramblers 25 percent stock interest in exchange for the IBM stock.;Subsidiary then adopts a plan of complete liquidation and distributes its;assets to Parent in complete liquidation.;a. What is the tax;result to Roy?;b. Does subsidiary recognize;any gain on the redemption or the liquidation?;c. What are Parent?s;bases for the assets received?;d. What happens to;Subsidiary?s NOL and E&P?Comprehensive;Problem 16-55;Mini-Skits;Ltd., owned by one shareholder, owns one asset, a building worth $100,000 with;a zero basis. The shareholder?s stock basis is $20,000. A plan of complete;liquidation is adopted. What are the tax consequences to both parties in each;of the following cases?;a. The building is;deeded to the shareholder, Bill Jones, who is taxed under Code Sec. 331.;b. The building is;sold for an installment note that is distributed to Bill.;c. Mini-Skirts Ltd. Sells;the building and presents a cashier?s check for $100,000 to Bill.;d. The building is;deeded to the shareholder, Bill Inc., in a Code Sec. 332 liquidation.;Label;the following transactions;a. A Nevada;corporation formed a corporation in Florida and transferred all assets to it;for 100 percent of its stock. It then distributed the stock to its shareholders;in cancellation of their Nevada corporation stock and was dissolved.;b. ABC Corp. acquired;all the stock of MNO Corp. for its convertible bonds. All MNO assets were;transferred to ABC, whereupon MNO was dissolved.;c. A corporation;issues $30,000 worth of its own voting stock to retire some of its outstanding;bonds with a principle amount of $40,000.;d. Convertible;preferred stock is converted into common stock of the issuing corporation.;e. A corporation;incorporates a division and distributes the shares received pro rata to its;shareholders.;f. A corporation;distributes preferred stock for each 10 shares of common stock outstanding.6;An S corporation has;the following information;Sales;Dividend income;Tax-exempt interest;Long-term capital gain;Short-term capital;gain;Cost of goods sold;Advertising expense;Charitable;contributions;Interest expense;Salary expense;Other operating;expenses;Compute the S;corporation taxable income for the year.


Paper#53051 | Written in 18-Jul-2015

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