6.The stock in Black Corporation is owned by Joseph and Elizabeth, who are unrelated. Joseph owns 80%and Elizabeth owns 20% of the stock in Black Corporation. The following assets are to be distributed incomplete liquidation of Black Corporation:CashInventoryEquipmentAdjustedBasisFair MarketValue$300,000$300,00075,000100,000200,000100,000a.What gain or loss would Black Corporation recognize if it distributes the cash and equipmentto Joseph and the inventory to Elizabeth?b. What gain or loss would Black Corporation recognize if it distributes the cash and inventory toJoseph and the equipment to Elizabeth?

The objective of the question is to calculate the gain or loss that Black Corporation would…

Answered: 6. The stock in Black Corporation is…

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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Blue Corp. purchased 100% of the stock of Magenta Corp. in 1984 for $300,000. Early this year, Magenta was liquidated. Blue Corp. received all of Magenta’s assets, which had a basis to Magenta Corp. of $420,000 and a FMV of $440,000. Assume the requirements of §332 were satisfied. What about of gain will Blue Corp. recognize any gain as a result of the liquidation?
Required information. Problem 19-63 (LO 19-5) (Algo) [The following information applies to the questions displayed below] Tiffany and Carlos decided to liquidate their jointly owned corporation, Royal Oak Furniture (ROF) After liquidating its remaining inventory and paying off its remaining liabilities, ROF had the following tax accounting balance sheet Adjusted Tax Basis $ 205,500 14,500 205,000 $425,000 Cash Building Land Total FMV $ 205,500 66,500 139,000 $ 411,000 Appreciation (Depreciation) Gain or loss recognized 52,000 (66,000) $ (14,000) Under the terms of the agreement, Tiffany will receive the $205,500 cash in exchange for her 50 percent interest in ROF Tiffany's tax basis in her ROF stock is $55,000. Carlos will receive the building and land in exchange for his 50 percent interest in ROF His tax basis in the ROF stock is $103,000 Assume for purposes of this problem that the cash available to distribute to the shareholders has been reduced by any tax paid by the corporation…
Abel Corp., an S corp., distributes property to a shareholder named Jay. Immediately before the distribution, the basis of Jay's investment in Abel Corp. totaled $31,000. Additional information follows: Adjusted basis of the property at the distribution date: $20,000 FMV of the property at the distribution date: $19,000 a. What is Jay's basis in his stock investment after the distribution? b. What is Jay's basis in the property after the distribution? c. What amount of loss would Abel Corp. recognize as a result of the distribution?
The stock in Ivory Corporation is owned by Gold Corporation (80%) and Imelda (20%). Gold Corporation purchased its shares in Ivory nine years ago at a cost of $650,000, and Imelda purchased her shares in Ivory four years ago at a cost of $175,000. Ivory Corporation has the following assets that are distributed in complete liquidation: Adjusted Basis Fair Market ValueCash $600,000 $600,000Inventory 80,000 200,000Equipment 350,000 200,000a. Assume that Ivory Corporation distributes the cash and inventory to Gold Corporation and the equipment to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?b. Assume that Ivory Corporation distributes the cash and equipment to Gold Corporation and the inventory to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?
Summer Company holds assets with a fair value of $125,000 and a book value of $93,000 and liabilities with a book value and fair value of $28,000. Required: Compute the following amounts if Parade Corporation acquires 65 percent ownership of Summer: a. What amount did Parade pay for the shares if no goodwill and no gain on a bargain purchase are reported? b. What amount did Parade pay for the shares if the fair value of the noncontrolling interest at acquisition is $45,150 and goodwill of $32,000 is reported? c. What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Parade pays $79,300 to acquire its ownership and goodwill of $25,000 is reported?
26. Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $13,280,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $9,700,000. The fair values of all of Smith’s assets and liabilities were equal to their book values with the following exceptions: Book Value Fair Value Receivables $ 3,200,000 $ 2,810,000 Property, plant, and equipment 9,900,000 11,490,000 Intangible assets 390,000 1,580,000 Required:Calculate the amount paid for goodwill.
=&inprogress=false During the current year, Jimmy incorporates his data processing business. Jimmy is the sole shareholder. The following assets are transferred to the corporation: Cash $2,000 Computer Equipment: Fair market 20,000 value Adjusted basis 12,000 Original cost 24,000 Furniture: Fair market 20,000 value Adjusted 32,000 basis Original cost 64,000 How much gain (loss) will Jimmy recognize from the transfer of the assets to the corporation? Oa. S-0- Ob. $8,000 Oc. S(12.000) Od. $20,000 Oe. S(4.000) Previous Next
Zhang incorporated her 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 bases: FMV Adjusted Basis Inventory $ 60,000 $ 30,000 Building 450,000 300,000 Land 690,000 900,000 Total $ 1,200,000 $ 1,230,000 Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000. What is the corporation’s adjusted basis in each of the assets received in the exchange?(Do not round intermediate calculations.)
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Green Corporation's assets are valued at $1,407,500 after payment of all corporate debts, except for $211,125 of taxes payable on net gains it recognized on the liquidation. Bruno, an individual and the sole shareholder of Green, has a basis of $73,894 in his stock. Compute the gain or loss recognized by Bruno on the liquidation of Green Corporation. Bruno has a recognized of $fill in the blank 2 as a result of the liquidation.
Shauna and Danielle decided to liquidate their jointly owned corporation, Woodward Fashions Incorporated (WFI). After liquidating its remaining inventory and paying off its remaining liabilities, WFI had the following tax accounting balance sheet: Adjusted FMV Таx Basis Appreciation $ 165,000 33,000 $ 165,000 16,500 Cash Building 16,500 132,000 66,000 $ 247,500 Land 66,000 $ 330,000 $ 82,500 Total Under the terms of the agreement, Shauna will receive the $165,000 cash in exchange for her 50 percent interest in WFI. Shauna's tax basis in her WFI stock is $41,250. Danielle will receive the building and land in exchange for her 50 percent interest in WFI. Danielle's tax basis in her WFI stock is $82,500. Assume for purposes of this problem that the cash available to distribute to the shareholders has been reduced by any tax paid by the corporation on gain recognized as a result of the liquidation. (Negative amounts should be indicated by a minus sign.) c. What amount of gain or loss does…
25. Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2020, Hamilton sold $1,000,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2022. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. a. December 31, 2022 b. December 31, 2023 c. December 31, 2024

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