a. What amount of gain or loss does ROF recognize in the complete liquidation? Gain or loss recognized
a. What amount of gain or loss does ROF recognize in the complete liquidation? Gain or loss recognized
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 on gain recognized as a result of the
liquidation
Note: Negative amounts should be indicated by a minus sign.
Problem 19-63 Part a (Algo)
a. What amount of gain or loss does ROF recognize in the complete liquidation?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6a75786d-7a9a-4e95-a767-536e11369dd2%2Fd53f3b4a-216f-426e-8883-a796878b8a87%2Ft2s5d9a_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 on gain recognized as a result of the
liquidation
Note: Negative amounts should be indicated by a minus sign.
Problem 19-63 Part a (Algo)
a. What amount of gain or loss does ROF recognize in the complete liquidation?
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