(4) Two unrelated individuals, Aaron & Burr, own the stock of ABC Corporation. ABCredeems all of Aaron's stock in a transaction that fits within the provisions of $302(a). ABChad earnings and profits equal to $80,000. The corporation's assets have a fair market valueequal to $400,000 and liabilities equal to $280,000.(a) What is the proper amount, if any, of he reduction of ABC's earnings and profits ifAaron received a $60,000 check in exchange for her ABC stock?(b) What is the proper amount, if any, of the reduction of ABC's earnings and profits if thecorporation's assets were worth $340,000, and Aaron received $30,000 in exchange forhis ABC Corporation stock?114%A Focusof 2619 wordsDIIF12F10F8del9.

Stock refers to the issuance of shares or equity by a company to raise funds from investors. When a…

Answered: (4) Two unrelated individuals, Aaron &…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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I will thumbs up for a timely response and the correct answer. Iowa corporation distributes land to its 30% individual shareholder in complete liquidation. The other 70% is owned by an unrelated party. The land (acquired by purchase) has a FMV of $60,000 and is subject to a liability of $80,000. The basis in the land is $70,000. The shareholder assumes the liability. What is the corporation’s realized gain or loss on the distribution.
ITA 86(1) is often referred to as an estate freeze. Mrs. X. holds all the outstanding 1,000 common shares of a private corporation with an Adjusted Cost Base (ACB) of $1,000 and the current fair market value (FMV) of the shares is $500,000, Mrs. X would like to freeze the value of her shareholding and pass on the future growth of the corporation to her adult children, Y and Z. To accomplish the ITA 86(1) estate freeze, O A. Mrs. X sells her common shares to Y and Z for $250,000 each. OB. Mrs. X sells her common share to Y and Z for $500 each. O C. Mrs. X exchanges her 1,000 common shares for redeernable preferred shares with a total redemption value of $1,000. D. Mrs. X exchanges her 1,000 common shares for redeemable preferred shares with a total rodemption value of $500,000.
On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 $471,800 $566,160 $94,360 Property 2 $802,060 $613,340 ($188,720) Net built-in loss ($94,360) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 45% shareholder when the property is worth $518,980. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022. Martin's basis is Property 1 is a Martin's basis in Property 2 is a basis of $ basis of $ b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $
Hello, I need help solving this accounting problem.
Howard Corporation liquidates and distributes $20,000 cash and land with a fair market value of $80,000 to its sole shareholder, Ryan. Ryan also assumes a $12,000 mortgage that is a attached to the land. Ryan’s basis in the stock is $70,000. Compute the amount of gain or loss that Ryan will recognize on the liquidation.
Jazz Corporation owns 10% of the Williams Corp. stock. Williams distributed a $28,000 dividend to Jazz Corporation. Jazz Corp's taxable income (loss) before the dividend was ($3,800). What is the amount of Jazz's dividends received deduction on the dividend it received from Williams Corp.? Multiple Choice so. $12300. $14,000. $21350. None of the choices is correct.
On January 7, 2021, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder’s basis, the fair market value, and the built-in gain (loss) of each property are: Martin Corporation Properties Property Shareholder's Basis Fair Market Value Built-in Gain (Loss) Property 1 $300,000 $375,000 $75,000 Property 2 $525,000 $400,000 ($125,000) Net Built-In Loss: ($50,000) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $350,000. Compute Martin’s basis in Property 1 and in Property 2 as of January 7, 2021. Compute Martin’s realized and recognized loss on the liquidating distribution of Property 2.
4 Packard Corporation transferred its 100 percent interest to State Company as part of a complete liquidation of the company. In the exchange, Packard received land with a fair market value of $445,000. Packard's basis in the State stock was $677,500. The land had a basis to State Company of $625,000. What amount of loss does State recognize in the exchange and what is Packard's basis in the land it receives? Multiple Choice $180,000 loss recognized by State and a basis in the land of $445,000 to Packard. $180,000 loss recognized by State and a basis in the land of $625,000 to Packard. No loss recognized by State and a basis in the land of $445,000 to Packard. No loss recognized by State and a basis in the land of $625,000 to Packard.
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
Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted tax bases: Inventory Building Land Total The fair market value of the corporation's stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ramon. Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. Required: a. What amount of gain or loss does Ramon realize on the transfer of the property to his corporation? b. What amount of gain or loss does Ramon recognize on the transfer of the property to his corporation? c. What is Ramon's basis in the stock received in the new corporation? Required A FMV $24,000 54, 250 181, 000 $ 259, 250 Complete this question by entering your answers in the tabs below. Required B Adjusted Tax Basis…
The stock in Toucan Corporation is held equally by two brothers. Four years ago, the shareholders transferred property (basis of $200,000, fair market value of $220,000) to Toucan Corporation as a contribution to capital. In the current year and pursuant to a complete liquidation of Toucan, the property is distributed proportionately to the brothers. At the time of the distribution, the property had a fair market value of $40,000. What amount of loss will Toucan Corporation recognize on the distribution of the property? Oa. $160,000 Ob. $0 Oc. $20,000 Od. $180,000
16. Soozie transfers real estate to the Palladium Corporation in exchange for stock possessing 85% of the combined voting power of all classes of stock entitled to vote and 70% of the total number of shares of all other classes of stock. No other exchanges of property for stock of Palladium Corporation occurred at or near the time of the transfer by Soozie. The real estate Soozie transferred had an adjusted basis of $600,000 and a fair market value of $950,000 at the time of the transfer, while the stock had a fair market value of $875,000 at the time of the transfer. As a result of the transfer: a. Soozie recognizes gain of $350,000. b. Soozie recognizes gain of $275,000. c. Soozie recognizes a loss of $75,000. d. Soozie recognizes no gain or loss. e. None of the above.

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