1. Corp A wishes to acquire the business of Corp T. Corp T stock is worth $650 million, and its shareholderscumulatively have a tax basis of $300 million in the Corp T shares. Corp T has no debt, very little cash, and assets with acumulative tax basis of $100 million. Assume the Corp T shareholders don't want to pay tax on their gain. Whichtransactions are available in the following scenarios?a. Corp A is willing to use only its voting stock to acquire Corp Tb. Corp A wants to use its stock to acquire only 80% of Corp T, and pay cash for the rest, and it needs Corp T tocontinue in existence (due to valuable licenses Corp T holds)c. Corp A wants to acquire the assets of Corp T for itself and have Corp T go out of existenced.Corp A wants one of its subsidiaries to acquire the assets of Corp T

The acquisition is when one company wants to overtake or acquire another. If voting rights are to be…

Answered: 1. Corp A wishes to acquire the…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Global Corporation distributed property with an $213,000 fair market value and a $117, 150 adjusted basis to one of its shareholders. The property was subject to a $64, 433 mortgage, which the shareholder assumed. Global has ample E & P to cover any distribution made during the year. What is the amount of the shareholder's dividend income on the distribution? $fill in the blank 1 What is the shareholder's basis in the property received? $fill in the blank 2
Assume Mr. Jones successfully convert his business to a corporation. This corporation has $100,000 of taxable income from operations plus $5,000 of interest income and $100,000 of dividend income. During the previous year, the company paid dividends equal to $8,000. What is its tax liability at 21% corporate tax rate?
The ABC company bought land 2 years ago for $20,000. The FMV, now is $24,000 the corporation still owes $15,000 on this purchase. The company makes a non liquidating distribution of this property to a stockholder who accepted the debt. What is the tax effect to the shareholder of receiving this distribution? A. This is no tax effect to an owner who receives a nonliquidating distribution B. Shareholder must recognize income of $9000 C. Shareholder must recognize income of $20,000 D. Shareholder must recognize income of $24,000
Hw.11.
ABC Co. is a retail outlet. Recently ABC Co. sold its shares in Public Corp. for $10,000. The shares originally cost ABC Co. $7,000. For tax purposes, this is an example of a. capital income b. business income c. other income d. property income
2. Ima Start sets up a corporation as its sole shareholder and contributes cash, divided as follows: $50,000 capital and $150,000 debt. Discuss possible tax consequences. 3. C corporation has maintained $500,000 from earnings without distributing a dividend. The IRS is challenging this. Discuss two options to avoid an accumulated earnings tax.
XCorp and YCorp are each 100% owned by Xerxes. Xerxes has decided to amalgamate them without triggering tax by using Section 87 of the Income Tax Act. XCorp had 200 common shares with a PUC and ACB of $500, and a FMV of $5,000. YCorp has 100 common shares with a PUC and ACB of $700, and a FMV of $6,000. What is the PUC and ACB of the amalgamated company's shares? ) 11,000 600 1,200 500
Mr. ABC sold shares of resident foreign corporation directly to a buyer. The shaes were purchased for P200,000 and were sold at a net selling price of P420,000. Compute the capital gain tax. A. P 33.000B. P 22,000C. P 11,000D. zero
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company’s tax accounting balance sheet. The relevant information is summarized as follows: Note: Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign. FMV Adjusted Tax Basis Appreciation Cash $ 10,000 $ 10,000 Receivables 15,000 15,000 Building 100,000 50,000 50,000 Land 225,000 75,000 150,000 Total $ 350,000 $ 150,000 $ 200,000 Payables $ 18,000 $ 18,000 Mortgage* 112,000 112,000 Total $ 130,000 $ 130,000 * The mortgage is attached to the building and land. Ernesto was asking for $400,000 for the company. His tax basis in the BLI stock was $100,000. Included in the sales price was an unrecognized customer list valued at $100,000. The unallocated portion of the purchase price…
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Which statement below is incorrect in relation to the taxation of companies? A.Companies are not entitled to a discount on capital gains B.Dividends paid by a company are included in the assessable income of resident shareholders C.The (flat) rate of tax for companies is 30% (unless entitled to a lower rate of corporate tax) D.Companies are entitled to a 50% discount in capital gains

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