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1. Jack receives a nontaxable distribution of stoc...




1. Jack receives a nontaxable distribution of stock right during the year from Gold Corporation on January 30. Each right entitles the holder to purchase one share of stock for $50. One right is issued for every share of stock owned. Jack own 100 shares of stock purchased two years ago for $5000. At the date of distribution, the right is worth $1000 (100 rights at $10per right) and Jack's stock in Gold Corporation is worth $6000 (or $60 per share). On December 1, Jack sells all stock right for $13 per right. How much gain does Jack recognized on the sale? Q: Jack?s gain on sale of the sock right is $___ 2. Jack Corporation declared a stock dividend to all common stock shareholders of record on December 31, 2010. Shareholders will receive 1 share of Jack common stock for each 5 shares of common stock they already own. Perry own 500 shares of Jack common stock with a tax basis of $120 per share. The fair market value of the Jack common stock was $80 per share on December 31, 2012. What is Perry?s basis (per share) in his new and existing Jack common stock, assume the distribution is non-taxable? A. $0 B. $80 C. $100 D. $120 3. Jabatek Inc. experienced a net capital loss of $20,000 in 2011. It had a net capital gain of $8000 in 2007, $7000 in 2008 and $2000 in 2009. In 2010, though the company suffered a net operating loss, it had net capital gain of $2000. What is the amount of Jabayek Inc.?s capital loss carryover to 2012? A. $1,000 B. $3000 C. $9,000 D. $11,000 E. some of other amount (Hint: key concept: a)capital gains and losses can carry back 3 years and forward 5 years, b)carry backs may not create or add to NOL. c) corporations can't offset capital losses against ordinary income (contrast $3000/year individual). 4. Jenny?s outside basis in her interest in the JAG partnership is $150,000 before any distribution. Jenny is a 30% partner and her share of JAG liabilities is $30,000. JAG reduces Jenny?s interest to 20% by distributing the following assets to her: Cash, 40000 FMV. Inventory, 10000 FMV, JAG tax basis $5000. Capital asset, $10,000 FMV, JAG tax basis $15000. Q: 1) What basis will Jenny have in each asset she received? Cash$____ Inventory$______ capital asset$___ 2) What does Jenny have in her partnership interest after the distribution? $___ 3) How much gain or loss will Jenny recognized on the distribution? $___ 5. Jack, a one-third partner in the BKL partnership, receive a proportional distribution to liquidate her partnership interest. The distribution consists of $50000 cash and inventory with a fair value of $50,000 (inside basis is $30,000). Jack?s outside basis is $90,000 including her $20,000 share of BKL?S liabilities. What is the amount and character of Jack?s recognized gain or loss and what basis will Jack have in the distributed inventory? A: $10,000 gain, $30,000 basis in inventory B. 20,000 gain, $50,000 basis in inventory C. o gain, $20,000 in inventory D. None of the above is correct My process: outside basis 90000 ? cash 50000= 40,000 ? debt relief 2000/3 =33333 ? 30,000 =3333 So, the 30,000 basis in inventory, and 3333 gain. My answer is D. But, I am sure the answer. Please give me your answer and process, thanks. 6. Jack receives a proportionate, non-liquidating distribution from the Colours Partnership. The distribution consists of $18,000 cash and a capital asset with an adjusted basis to the partnership of $12000 and a fair market value of $30,000. Immediately before the distribution, Jack?s adjusted basis in his partnership interest is $70,000. Which of the following is correct regarding Jack?s basis in the noncash property received and Jack?s basis in his partnership interest after the distribution? A: $12,000 basis in non-cash property and $40,000 basis in partnership interest B: 30,000 basis in non-cash property and 50000 basis in partnership interest C: $52000 basis in non-cash property and $0 basis in partnership interest D: none of the above is correct


Paper#7678 | Written in 18-Jul-2015

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