On April 23, 2020, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1,200,000.Amazon Corporation has assets with a fair market value of $1,400,000 (basis of $800,000), no liabilities, and no loss or tax creditcarryovers. Auk Corporation files a timely § 338 election. Assume that both the aggregate deemed sale price (ADSP) and adjustedgrossed-up basis (AGUB) are $1,306,329.If an amount is zero, enter "0". If required, round your answers to the nearest dollar.of $a. What are the tax consequences of the § 338 election to Amazon Corporation and to Auk Corporation?Amazon Corporation is deemed to have sold its assets which results in a realized gain ✔$ 600,000 X recognized. Amazon is treated as a new X corporation with E & P $800,000 X in the assets, and its holding period in the assets begin on April 24, 2020 Xnow has a basis of $Auk Corporation has a recognized gain of $1,400,000 X of which750,000 X. Amazon Corporation600,000 X and its basis in the Amazon Corporation stock is $ 1,200,000 V

Acquisition is a process of acquiring one company by the other company. The reason for the…

On April 23, 2020, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1,200,000. Amazon Corporation has assets with a fair market value of $1,400,000 (basis of $800,000), no liabilities, and no loss or tax credit carryovers. Auk Corporation files a timely § 338 election. Assume that both the aggregate deemed sale price (ADSP) and adjusted grossed-up basis (AGUB) are $1,306,329. If an amount is zero, enter "0". If required, round your answers to the nearest dollar. a. What are the tax consequences of the § 338 election to Amazon Corporation and to Auk Corporation? Amazon Corporation is deemed to have sold its assets which results in a realized gain ✓ of $ 1,400,000 X of which 600,000 X recognized. Amazon is treated as a new X corporation with E & P $ 750,000 X. Amazon Corporation now has a basis of $ 800,000 X in the assets, and its holding period in the assets begin on April 24, 2020 X . Auk Corporation has a recognized gain of $ 600,000 X and its basis in the Amazon Corporation stock is $ 1,200,000

On April 23, 2020, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1,200,000. Amazon Corporation has assets with a fair market value of $1,400,000 (basis of $800,000), no liabilities, and no loss or tax credit carryovers. Auk Corporation files a timely § 338 election. Assume that both the aggregate deemed sale price (ADSP) and adjusted grossed-up basis (AGUB) are $1,306,329. If an amount is zero, enter "0". If required, round your answers to the nearest dollar. a. What are the tax consequences of the § 338 election to Amazon Corporation and to Auk Corporation? Amazon Corporation is deemed to have sold its assets which results in a realized gain ✓ of $ 1,400,000 X of which 600,000 X recognized. Amazon is treated as a new X corporation with E & P $ 750,000 X. Amazon Corporation now has a basis of $ 800,000 X in the assets, and its holding period in the assets begin on April 24, 2020 X . Auk Corporation has a recognized gain of $ 600,000 X and its basis in the Amazon Corporation stock is $ 1,200,000

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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