El Toro Corporation declared a common stock distribution to all shareholders of record on June 30, 20x3. Shareholders will receive 1 share of El Torostock for each 2 shares of stock they already own. Raoul owns 230 shares of El Toro stock with a tax basis of $51 per share. The fair market value of theEl Toro stock was $91 per share on June 30, 20X3. What are the tax consequences of the stock distribution to Raoul?Multiple Choice$0 dividend income and a tax basis in the new stock of $91 per share.$0 dividend income and a tax basis in the new stock of $51 per share.$0 dividend income and a tax basis in the new stock of $34 per share.$10,465 dividend and a tax basis in the new stock of $91 per share.

The shareholders are not taxed on the stock dividend. Also, the market value remains the same after…

Answered: El Toro Corporation declared a common…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Determine the basis of stock in the hands of the shareholder, the basis to the corporation of the contributed property, and the gain, if any, to the shareholder in each of the follow independent cases. In all cases, assume that the 80% test is met. a. Pierre contributes a vehicle with a FMV of $ 6,000.00 and basis of $ 8,000.00. b. Marcus contributes land with a FMV of $ 500,000.00, basis of $ 300,000.00, and debt of $ 250,000.00. c. Same as b. Except Marcus also receives cash of $ 25,000.00. d. Patricia contributes an apartment building with a FMV of $ 200,000, basis of $ 50,000.00, and debt of $ 125,000.00
Ashvin
Ian holds 100 shares in Big Bank Pty Ltd. The company paid a partially franked dividend of $4 per share (franked to 30%) on 1 June. Assume a corporate tax rate of 30%. How much tax (if any) must Ian pay on the dividend income? Assume his applicable marginal tax rate is 45% and this is the only transaction. a. $160 b. Nil c. $151 d. $57
2. T corporation (e & p $800,000) has 1,000 shares of stock outstanding. The shares are owned as followed: james 600 shares; stephanie (james sister) 300 shares; luke (james son) 100 shares. T corporation owns land (basis of $300,000, fmv of $260,000) that it purchased as an investment 10 years ago. James had a basis of $275,000 in his shares. What are the tax consequences for both t cororation and james if the distribution is: a qualified stock redemption? b. liquidating distribution?
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Lucas currently owns 350 shares of Tidewater Bay, Inc. Each share is worth $42. If the company declares a 5-for-3 split, Marcus will own _______ shares at a value of ________ per share after the split. 1. 210; $25.20 2. 210; $70.00 3. 583.33; $25.20 4. 583.33; $42 5. 583.33; $70.00
Grayson (single) is in the 24 percent tax rate bracket and has sold the following stocks in 2023: Note: Loss amounts should be indicated by a minus sign. Stock Stock A Stock B Stock C Stock D Stock E Date Purchased 1/23/1999 4/10/2023 8/23/2021 5/19/2013 8/20/2023 Net capital gain Basis $ 7,250 14,000 10,750 5,230 7,300 Date Sold 7/22/2023 9/13/2023 10/12/2023 10/12/2023 11/14/2023 Amount Realized $ 4,500 17,500 15,300 12,400 3,500 d. What amount of the gain, if any, is subject to the preferential rate for certain capital gains?
6. Brian owns 25% of Raisman Corporation's single class of stock (Brian owns 500 of 2,000 outstanding shares). Brian's basis in the stock is $12,000. Raisman's E&P is $132,000. If Raisman redeems 200 of Brian's stock for $28,000, Brian must report dividend income (if any) of (show all work and explain your answer): A) $0. B) $11,200. C) $16,800. D) $28,000.
Grayson (single) is in the 24 percent tax rate bracket and has sold the following stocks in 2022 Note: Loss amounts should be indicated by a minus sign. Stock Stock A Stock B Stock C Stock D Stock E Date Purchased 1/23/1998 4/10/2022 8/23/2020 5/19/2012 8/20/2022 Basis $ 7,650 14,800 11,750 5,550 7,580 Net long-term capital gain or loss Date Sold 7/22/2022 9/13/2022 10/12/2022 10/12/2022 11/14/2022 Amount Realized $ 4,820 18,490 16,660 13,000 3,700 b. What is Grayson's net long-term gain or loss from these transactions?
Twinning, a calendar year S corporation, distributes $62,200 cash to its only shareholder, Carl, on December 31. Before the distribution, Carl's basis in his stock is $74,640, Twinning 's AAA balance is $27,990, and Twinning has $9,330 of AEP. What is Carl’s stock basis after the distribution? Answer_______
Haresh

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