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The stock in Black Corporation is owned by Sam and...

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The stock in Black Corporation is owned by Sam and Susan, who are unrelated. Sam owns 60% and Susan owns 40% of the stock in Black Corporation. All of Black Corporation?s assets were acquired by purchase. The following assets are to be distributed in complete liquidation of Black Corporation: Adjusted Fair Market Basis Value Cash $200,000 $200,000 Inventory 165,000 150,000 Equipment 210,000 250,000 Land 430,000 400,000 a. What gain or loss would Black Corporation recognize if it distributes the cash, inventory, and equipment to Sam and the land to Susan? b. What gain or loss would Black Corporation recognize if it distributes the cash and land to Sam and the inventory and equipment to Susan?,are you still working on this?,the answer was incorrect the correct answer is What gain or loss would Black Corporation recognize if it distributes the cash, inventory, and equipment to Sam and the land to Susan? Black Corporation will recognize a gain of $40,000 on the distribution of equipment to Sam, and a loss of $30,000 on the distribution of land to Susan, and the $15,000 loss on the inventory to Sam, but the loss will be disallowed. This is a distribution of loss property to a related party since Sam owns more than 50% stock and the distribution is not pro rata. What gain or loss would Black Corporation recognize if it distributes the cash and land to Sam and the inventory and equipment to Susan? Black Corporation will recognize a $30,000 loss on the land but it?s to a related party so it will be disallowed. And a gain of $40,000 on the equipment and a loss of $15,000 on the Inventory to Susan, the distribution of the inventory is not to a related party because Susan does not own more than 50% of the stock in Black Corporation.

 

Paper#7693 | Written in 18-Jul-2015

Price : $25
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