A, Inc. has 1,000 shares of common stock outstanding. These shares are owned by M (600 shares) and S (400 shares). A, Inc. has current &accumulated eamings & profits of $15,000,000. A, Inc. faces a marginal tax rate of 21%, All 100 shares owned by S were redeemed. Theredemption price paid was land (FMV-$1.200,.000; cost basis - $500,000) plus cish of $2.300.000/Spaid 57000 for each share of has stock when beacquired it five years ago. M is the mother of S. What are the tax results of the redemption to S?$3.500,000 Dividend$700.000 Long-term Capital GainNo Gain Recognized$3.500,000 Long-term Capital GainUnder a plan of complete liquidation, Key Corporation distributes land (not a dasqualified property) with an adjusted basis of S410,000 and an FMV of$300,000 for all Sharon's stock. Sharon's basis in her 5% interest in the Key stock is s250.000. Find Shuaren's gain or loss and Key Corporation's recognized gainor lossO RecognizedGain/LossRecognized Gain/Loss50$160,000RecognizedGain/Loss$160,000A)Recognized Gain/LossS110,000 lossO RecognizedGain/Loss$50,000Recognized Gain/Loss50RecognizedGain/Loss550,000Recognized Gain/Loss$110,000 loss

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A, Inc. has 1,000 shares of common stock outstanding. These shares are owned by M 600 shares) and S (400 shares). A. Inc. has current & accumulated eamings & profits of $15,000,000. A, Inc. faces a marginal tax cate of 21%, All 400 shares owned by S were redeemed. The redemption price paid was land (EMV-S1.200.000 cost basis- S00000 pha cinh of $2.300.000/Spal for cadsbate of has shock when be aquired it five years ago. Mis the mother of S. What are the tax results of the redemption to S $3.500.000 Dividend $700.000 Long-term Capital Gain No Gain Recognized $3.500,000 Long-term Capital Gain

A, Inc. has 1,000 shares of common stock outstanding. These shares are owned by M 600 shares) and S (400 shares). A. Inc. has current & accumulated eamings & profits of $15,000,000. A, Inc. faces a marginal tax cate of 21%, All 400 shares owned by S were redeemed. The redemption price paid was land (EMV-S1.200.000 cost basis- S00000 pha cinh of $2.300.000/Spal for cadsbate of has shock when be aquired it five years ago. Mis the mother of S. What are the tax results of the redemption to S $3.500.000 Dividend $700.000 Long-term Capital Gain No Gain Recognized $3.500,000 Long-term Capital Gain

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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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

Question

A, Inc. has 1,000 shares of common stock outstanding. These shares are owned by M (600 shares) and S (400 shares). A, Inc. has current &
accumulated eamings & profits of $15,000,000. A, Inc. faces a marginal tax rate of 21%, All 100 shares owned by S were redeemed. The
redemption price paid was land (FMV-$1.200,.000; cost basis - $500,000) plus cish of $2.300.000/Spaid 57000 for each share of has stock when be
acquired it five years ago. M is the mother of S. What are the tax results of the redemption to S?
$3.500,000 Dividend
$700.000 Long-term Capital Gain
No Gain Recognized
$3.500,000 Long-term Capital Gain
Under a plan of complete liquidation, Key Corporation distributes land (not a dasqualified property) with an adjusted basis of S410,000 and an FMV of
$300,000 for all Sharon's stock. Sharon's basis in her 5% interest in the Key stock is s250.000. Find Shuaren's gain or loss and Key Corporation's recognized gain
or loss
O Recognized
Gain/Loss
Recognized Gain/Loss
50
$160,000
Recognized
Gain/Loss
$160,000
A)
Recognized Gain/Loss
S110,000 loss
O Recognized
Gain/Loss
$50,000
Recognized Gain/Loss
50
Recognized
Gain/Loss
550,000
Recognized Gain/Loss
$110,000 loss

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