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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B6.
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 60,000 $ 30,000 Inventory Building Land Total 450,000 690,000 $1,200,000 300,000 900,000 $1,230,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,100,000. The transaction met the requirements to be tax-deferred under $351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) 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. e. How…
Reyes Corp. owned 70% of the voting common stock of Lee Co. During 2021, Lee sold a parcel of land to Reyes. The land had a book value of $87,000 and was sold to Reyes for $138,000. Lee's reported net income for 2021 was $127,000. Required: Assuming there are no other intra-entity transactions nor excess amortizations, what was the net income attributable to the noncontrolling interest of Lee? Due to the sale of land being an upstream sale, and not sold to an external entity the Gain would be deferred each year.
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?
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?
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.)
hen Bruno's basis in his LLC interest is $283,800, he receives cash of $113,520, a proportionate share of inventory, and land in a distribution that liquidates both the LLC and his entire LLC interest. The inventory has a basis to the LLC of $70,950 and a fair market value of $90,816. The land's basis is $127,710, and the fair market value is $113,520. How much gain or loss does Bruno recognize, and what is his basis in the inventory and land received in the distribution? If an amount is zero, enter "0". Bruno recognizes (a gain, loss, neither a gain or loss) of $_____________. Bruno's basis in the inventory is $_______________ and his basis in the land is $___________________.
In liquidation, balances prior to the distribution of cash to the partners are: Cash $755000; James, Capital $410000; Laney, Capital $380000, and Howell, Capital $35000 deficiency. The income ratio is 6:2:2, respectively. How much cash should be distributed to Laney if Howell does not pay his deficiency? O $357000 O $346250 O $371250 O $380000
Newton is a one-third owner of ProRite Partnership. Newton has decided to sell his interest in the business to Betty for $50,000 cash plus the assumption of his share of ProRite’s liabilities. Assume Newton’s inside and outside bases in ProRite are equal. ProRite shows the following balance sheet as of the sale date: Tax Basis FMV Assets Cash $ 80,000 $ 80,000 Receivables 25,000 25,000 Inventory 40,000 85,000 Land 30,000 20,000 Totals $ 175,000 $ 210,000 Liabilities and capital Liabilities $ 60,000 Capital— Newton 38,333 Capital— Barbara 38,334 Capital— Liz 38,333 Totals $ 175,000 What are the amount and character of Newton’s recognized gain or loss?
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.
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