Exercise 20-23 (Algorithmic) (LO. 3) Rebecca holds 100 shares of Gotchas stock that she purchased for $1,100 several years ago. In a merger of Gotchas into Solis, Inc., Rebecca exchanges her 100 Gotchas shares for 1,000 Solis shares and $220. Gotchas is valued at $24.20 per share and Solis at $2.20 per share. a. What is Rebecca's realized and recognized gain/loss from the reorganization? The exchange of Rebecca's stock b. What is Rebecca's basis in her Solis stock? income tax consequences for Gotchas or Solis.

Exercise 20-23 (Algorithmic) (LO. 3) Rebecca holds 100 shares of Gotchas stock that she purchased for $1,100 several years ago. In a merger of Gotchas into Solis, Inc., Rebecca exchanges her 100 Gotchas shares for 1,000 Solis shares and $220. Gotchas is valued at $24.20 per share and Solis at $2.20 per share. a. What is Rebecca's realized and recognized gain/loss from the reorganization? The exchange of Rebecca's stock b. What is Rebecca's basis in her Solis stock? income tax consequences for Gotchas or Solis.

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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Exercise 20-25 (Algorithmic) (LO. 3) Townsend, the sole shareholder of Pruett Corporation, has a $437,600 basis in his stock. He exchanges all of his Pruett stock for $547,000 of Rogers Corporation voting common stock plus land with a fair market value of $109,400 and basis of $27,350. Pruett distributed the land to Townsend. This exchange meets all Code requirements. If an amount is zero or there is no gain or loss, enter "0". a. What is Townsend's recognized gain/loss from the reorganization? Townsend recognizes a gain ✓ of $ 1,094,000 X. b. What is the gain/loss recognized by Pruett Corporation and Rogers Corporation on the reorganization? Rogers Corporation recognizes a gain ✔ of $ of $ 0 V. 0 X and Pruett Corporation recognizes no gain or loss c. What is Townsend's basis in the Rogers stock and the land received? The basis in the Rogers stock is $ 0 X and the basis in the land is $ 0 X.
Problem 19-29 (Algorithmic) (LO. 3) At her death, Chow owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch has earned average net profits of $1,950,000, and on the date of Chow's death, the book value of its stock is $4,875,000. An appropriate rate of return for Finch's business is in is 6.95%. If required, round your intermediate computations to the nearest dollar. a. If goodwill exists, the total value of Finch stock is $ What value would the IRS argue that the stock Chow owned should be included in her estate? b. Considering the facts given, identify some factors that could be present to reduce the value of such goodwill by selecting "Yes" for ones that can impact a goodwill valuation and "No" for ones that won't. 1. Extraordinary gains. 2. Lower than industry average salaries. 3. Chow was the key person in the success of the business, 4. The appropriate rate of return for this type of business is low.
< Problem 14-18 (Algorithmic) (LO. 6) Tobias is a 50% partner in Solomon LLC, which does not invest in real estate. On January 1, Tobias's adjusted basis for his LLC interest is $236,000, and his at-risk amount is $188,800. His share of losses from Solomon for the current year is $306,800, all of which is passive. Tobias owns another investment that produced $165,200 of passive activity income during the year. (Assume that Tobias is a single taxpayer, there were no distributions or changes in liabilities during the year, and the Solomon loss is Tobias's only loss for the year from any activity.) How much of Solomon's losses may Tobias deduct on his Form 1040? How much of the loss is suspended, and what Code provisions cause the suspensions? Applicable Provision Deductible Loss Suspended Loss Overall limitation At-risk limitation Passive loss limitation $ Therefore, Tobias can deduct $ on his return in the current year.
Required information [The following information applies to the questions displayed below.] George bought the following amounts of Stock A over the years: Note: Loss amounts should be indicated with a minus sign. Stock A Stock A Stock A Date Purchased 11/21/1997 3/18/2003 5/22/2012 Number of Shares 1,090 545 840 $ 26,160 9,810 30,240 On October 12, 2023, he sold 1,335 of his shares of Stock A for $38 per share. Adjusted Basis Gain or loss to be recognized b. How much gain or loss will George have to recognize if he specifically identifies the shares to be sold by telling his broker to sell all 840 shares from the 5/22/2012 purchase and 495 shares from the 11/21/1997 purchase?
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Exercise 7-21 (Algorithmic) (LO. 2) On May 9, 2018, Calvin acquired 600 shares of stock in Hobbes Corporation, a new startup company, for $103,300. Calvin acquired the stock directly from Hobbes, and it is classified as § 1244 stock (at the time Calvin acquired his stock, the corporation had $900,000 of paid- in capital). On January 15, 2020, Calvin sold all of his Hobbes stock for $10,330. Assume that Calvin is single. Assuming that Calvin is single, determine his tax consequences as a result of this sale. If an amount is zero, enter "0". As a result of the sale, Calvin has: Ordinary loss: Short-term capital loss: Long-term capital loss: DO
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Donative Items (LO. 2) Herman inherits stock with a fair market value of $100,000 from his grandfather on March 1. On May 1, Herman sells half the stock at a gain of $10,000 and invests the $60,000 proceeds in Jordan County school bonds. The bonds' annual interest rate is 6%, which is paid on July 31 and January 31. On October 15, Herman receives a $2,200 dividend on the remaining shares of stock. Herman has a gross income of $ from these transactions.