Problem 15-63 (LO 15-3) (Static) [The following information applies to the questions displayed below.] Haruki and Bob have owned and operated SOA as a C corporation for a number of years. When they formed the entity, Haruki and Bob each contributed $100,000 to SOA. Each has a current basis of $100,000 in his SOA ownership interest. Information on SOA's assets at the end of year 5 is as follows (SOA does not have any liabilities): Assets Cash Inventory Land and building FMV $ 200,000 Adjusted Basis Built-in Gain $ 200,000 $ 0 80,000 40,000 170,000 40,000 50,000 220,000 Total $ 500,000 At the end of year 5, SOA liquidated and distributed half of the land and building, half of the inventory, and half of the cash remaining after paying taxes (if any) to each owner. Assume that, excluding the effects of the liquidating distribution, SOA's taxable income for year 5 is $0. Problem 15-63 Part b (Static) b. What are the amount and character of gain or loss Haruki will recognize when he receives the liquidating distribution of cash and property? Recall that his stock basis is $100,000 and he is treated as having sold his stock for the liquidation proceeds.
Problem 15-63 (LO 15-3) (Static) [The following information applies to the questions displayed below.] Haruki and Bob have owned and operated SOA as a C corporation for a number of years. When they formed the entity, Haruki and Bob each contributed $100,000 to SOA. Each has a current basis of $100,000 in his SOA ownership interest. Information on SOA's assets at the end of year 5 is as follows (SOA does not have any liabilities): Assets Cash Inventory Land and building FMV $ 200,000 Adjusted Basis Built-in Gain $ 200,000 $ 0 80,000 40,000 170,000 40,000 50,000 220,000 Total $ 500,000 At the end of year 5, SOA liquidated and distributed half of the land and building, half of the inventory, and half of the cash remaining after paying taxes (if any) to each owner. Assume that, excluding the effects of the liquidating distribution, SOA's taxable income for year 5 is $0. Problem 15-63 Part b (Static) b. What are the amount and character of gain or loss Haruki will recognize when he receives the liquidating distribution of cash and property? Recall that his stock basis is $100,000 and he is treated as having sold his stock for the liquidation proceeds.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
Problem 15-63 (LO 15-3) (Static)
[The following information applies to the questions displayed below.]
Haruki and Bob have owned and operated SOA as a C corporation for a number of years. When they formed the entity,
Haruki and Bob each contributed $100,000 to SOA. Each has a current basis of $100,000 in his SOA ownership interest.
Information on SOA's assets at the end of year 5 is as follows (SOA does not have any liabilities):
Cash
Inventory
Assets
Land and building
Total
$ 200,000
FMV
Adjusted
Basis
Built-in
Gain
$ 200,000
80,000
220,000
40,000
170,000
$ 0
40,000
50,000
$ 500,000
At the end of year 5, SOA liquidated and distributed half of the land and building, half of the inventory, and half of the cash
remaining after paying taxes (if any) to each owner. Assume that, excluding the effects of the liquidating distribution, SOA's
taxable income for year 5 is $0.
Problem 15-63 Part b (Static)
b. What are the amount and character of gain or loss Haruki will recognize when he receives the liquidating distribution of cash and
property? Recall that his stock basis is $100,000 and he is treated as having sold his stock for the liquidation proceeds.
Long-term capital gain](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fba78d3aa-d292-4f2c-9eb0-0e0844e8193a%2F4e4ac5f3-b1a4-4226-9273-aaf70b7f9599%2Fws8v41_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
Problem 15-63 (LO 15-3) (Static)
[The following information applies to the questions displayed below.]
Haruki and Bob have owned and operated SOA as a C corporation for a number of years. When they formed the entity,
Haruki and Bob each contributed $100,000 to SOA. Each has a current basis of $100,000 in his SOA ownership interest.
Information on SOA's assets at the end of year 5 is as follows (SOA does not have any liabilities):
Cash
Inventory
Assets
Land and building
Total
$ 200,000
FMV
Adjusted
Basis
Built-in
Gain
$ 200,000
80,000
220,000
40,000
170,000
$ 0
40,000
50,000
$ 500,000
At the end of year 5, SOA liquidated and distributed half of the land and building, half of the inventory, and half of the cash
remaining after paying taxes (if any) to each owner. Assume that, excluding the effects of the liquidating distribution, SOA's
taxable income for year 5 is $0.
Problem 15-63 Part b (Static)
b. What are the amount and character of gain or loss Haruki will recognize when he receives the liquidating distribution of cash and
property? Recall that his stock basis is $100,000 and he is treated as having sold his stock for the liquidation proceeds.
Long-term capital gain
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