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: Cash Building Land FMV $ 399,000 84,000 315,000 Adjusted Tax Basis $ 399,000 27,250 405,000 Total $ 798,000 $ 831,250 Appreciation (Depreciation) 56,750 (90,000) $ (33,250) Under the terms of the agreement, Tiffany will receive the $399,000 cash in exchange for her 50 percent interest in ROF. Tiffany's tax basis in her ROF stock is $59,000. Carlos will receive the building and land in exchange for his 50 percent interest in ROF. His tax basis in the ROF stock is $121,000. 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 e (Algo) Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive $319,200 in the liquidation and Carlos will receive the land and building plus $79,800. e. What amount of gain or loss does ROF recognize in the complete liquidation? Gain or loss recognized
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: Cash Building Land FMV $ 399,000 84,000 315,000 Adjusted Tax Basis $ 399,000 27,250 405,000 Total $ 798,000 $ 831,250 Appreciation (Depreciation) 56,750 (90,000) $ (33,250) Under the terms of the agreement, Tiffany will receive the $399,000 cash in exchange for her 50 percent interest in ROF. Tiffany's tax basis in her ROF stock is $59,000. Carlos will receive the building and land in exchange for his 50 percent interest in ROF. His tax basis in the ROF stock is $121,000. 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 e (Algo) Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive $319,200 in the liquidation and Carlos will receive the land and building plus $79,800. e. What amount of gain or loss does ROF recognize in the complete liquidation? Gain or loss recognized
Chapter28: Income Taxati On Of Trusts And Estates
Section: Chapter Questions
Problem 8DQ
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![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:
Cash
Building
Land
FMV
$ 399,000
84,000
315,000
Adjusted
Tax Basis
$ 399,000
27,250
405,000
Total
$ 798,000
$ 831,250
Appreciation
(Depreciation)
56,750
(90,000)
$ (33,250)
Under the terms of the agreement, Tiffany will receive the $399,000 cash in exchange
for her 50 percent interest in ROF. Tiffany's tax basis in her ROF stock is $59,000. Carlos
will receive the building and land in exchange for his 50 percent interest in ROF. His tax
basis in the ROF stock is $121,000. 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 e (Algo)
Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive
$319,200 in the liquidation and Carlos will receive the land and building plus $79,800.
e. What amount of gain or loss does ROF recognize in the complete liquidation?
Gain or loss recognized](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb102db85-d9e2-4c4e-9f7b-5856ff186ee7%2F9d58fbca-ceda-4d27-aa33-2cda1ce6072d%2F8f56iqd_processed.png&w=3840&q=75)
Transcribed Image Text: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:
Cash
Building
Land
FMV
$ 399,000
84,000
315,000
Adjusted
Tax Basis
$ 399,000
27,250
405,000
Total
$ 798,000
$ 831,250
Appreciation
(Depreciation)
56,750
(90,000)
$ (33,250)
Under the terms of the agreement, Tiffany will receive the $399,000 cash in exchange
for her 50 percent interest in ROF. Tiffany's tax basis in her ROF stock is $59,000. Carlos
will receive the building and land in exchange for his 50 percent interest in ROF. His tax
basis in the ROF stock is $121,000. 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 e (Algo)
Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive
$319,200 in the liquidation and Carlos will receive the land and building plus $79,800.
e. What amount of gain or loss does ROF recognize in the complete liquidation?
Gain or loss recognized
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