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;;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?

 

Paper#74524 | Written in 18-Jul-2015

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