Question:08 X Co. adopts a plan of complete liquidation and makes the following pro rata distributions to its shareholders (assume all are individuals): A- Cash: $70,000; B- Inventory: FMV-$20,000 Basis-$20,000 Mortgage-$10,000; C- Inventory: FMV-$30,000 Basis-$15,000 Mortgage-$40,000; D- Capital Asset: FMV-$500 Basis-$2,800; (Assume that X Co. acquired the property distributed to D in a Sec. 351 transfer 6 months before adopting the plan of liquidation when the FMV of the property was $800 and X Co.'s basis was $2,800).E- Capital Asset: FMV-$10,000 Basis- $4,000. The Gain or Loss recognized by E is SLL has a partner, Dick, who is involved in a nasty divorce. This partner's soon-to-be former wife Georgia has a very successful company. He feels his wife is trying to hide income from him. Dick asks you if a forensic accountant would be helpful in this situation. You do some research for Dick, and put together a report including the following: 1. A description of what forensic accounting is,2. 4 examples of where forensic accounting may be used, 3. Job requirements for forensic accountants, including whether they should have auditing experience and whether they should carry the CPA credential4. Your education opinion as to whether a forensic accountant would be helpful to Dick supported with research. Certified public accountants have imposed on themselves a rigorous code of professional conduct. Required: a. Discuss the reasons that the accounting profession adopted a code of professional conduct. b. One rule of professional ethics adopted by CPAs is that a CPA cannot be an officer, director, stockholder, representative, or agent of any corporation engaged in the practice of public accounting, except for the professional corporation form expressly permitted by the AICPA. List the arguments supporting the rule that a CPA's firm cannot be a corporation.
Question:08 X Co. adopts a plan of complete liquidation and makes the following pro rata distributions to its shareholders (assume all are individuals): A- Cash: $70,000; B- Inventory: FMV-$20,000 Basis-$20,000 Mortgage-$10,000; C- Inventory: FMV-$30,000 Basis-$15,000 Mortgage-$40,000; D- Capital Asset: FMV-$500 Basis-$2,800; (Assume that X Co. acquired the property distributed to D in a Sec. 351 transfer 6 months before adopting the plan of liquidation when the FMV of the property was $800 and X Co.'s basis was $2,800).E- Capital Asset: FMV-$10,000 Basis- $4,000. The Gain or Loss recognized by E is SLL has a partner, Dick, who is involved in a nasty divorce. This partner's soon-to-be former wife Georgia has a very successful company. He feels his wife is trying to hide income from him. Dick asks you if a forensic accountant would be helpful in this situation. You do some research for Dick, and put together a report including the following: 1. A description of what forensic accounting is,2. 4 examples of where forensic accounting may be used, 3. Job requirements for forensic accountants, including whether they should have auditing experience and whether they should carry the CPA credential4. Your education opinion as to whether a forensic accountant would be helpful to Dick supported with research. Certified public accountants have imposed on themselves a rigorous code of professional conduct. Required: a. Discuss the reasons that the accounting profession adopted a code of professional conduct. b. One rule of professional ethics adopted by CPAs is that a CPA cannot be an officer, director, stockholder, representative, or agent of any corporation engaged in the practice of public accounting, except for the professional corporation form expressly permitted by the AICPA. List the arguments supporting the rule that a CPA's firm cannot be a corporation.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 12CE
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Transcribed Image Text:Question:08
X Co. adopts a plan of complete liquidation and makes the following
pro rata distributions to its shareholders (assume all are individuals):
A- Cash: $70,000;
B- Inventory: FMV-$20,000 Basis-$20,000 Mortgage-$10,000;
C- Inventory: FMV-$30,000 Basis-$15,000 Mortgage-$40,000;
D- Capital Asset: FMV-$500 Basis-$2,800; (Assume that X Co. acquired
the property distributed to D in a Sec. 351 transfer 6 months before
adopting the plan of liquidation when the FMV of the property was $800
and X Co.'s basis was $2,800).E- Capital Asset: FMV-$10,000 Basis-
$4,000. The Gain or Loss recognized by E is
SLL has a partner, Dick, who is involved in a nasty divorce. This
partner's soon-to-be former wife Georgia has a very successful
company. He feels his wife is trying to hide income from him. Dick asks
you if a forensic accountant would be helpful in this situation. You do
some research for Dick, and put together a report including the
following: 1. A description of what forensic accounting is,2. 4 examples
of where forensic accounting may be used, 3. Job requirements for
forensic accountants, including whether they should have auditing
experience and whether they should carry the CPA credential4. Your
education opinion as to whether a forensic accountant would be helpful
to Dick supported with research.
Certified public accountants have imposed on themselves a rigorous
code of professional conduct.
Required:
a. Discuss the reasons that the accounting profession adopted a code
of professional conduct.
b. One rule of professional ethics adopted by CPAs is that a CPA
cannot be an officer, director, stockholder, representative, or agent of
any corporation engaged in the practice of public accounting, except
for the professional corporation form expressly permitted by the AICPA.
List the arguments supporting the rule that a CPA's firm cannot be a
corporation.
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