!Required InformationProblem 18-67 (LO 18-5) (Algo)[The following information applies to the questions displayed below]Nall Corporation made a distribution of $613,760 to Rusty In partial liquidation of the company on December 31 of thisyear. Rusty, an Individual, owns 100 percent of Nall Corporation. The distribution was in exchange for 50 percent of Rusty'sstock in the company. At the time of the distribution, the shares had a fair market value of $224 per share. Rusty's taxbasis in the shares was $50 per share. Nall had total E&P of $8.185.000 at the time of the distribution.Problem 18-67 Part b (Algo)b. Assuming Nail made no other distributions to Rusty during the year, by what amount does Nall reduce its total E&P because of thepartial liquidation?Reduction in E&P Required InformationProblem 18-67 (LO 18-5) (Algo)[The following information applies to the questions displayed below]Nall Corporation made a distribution of $613,760 to Rusty in partial liquidation of the company on December 31 of thisyear. Rusty, an Individual, owns 100 percent of Nall Corporation. The distribution was in exchange for 50 percent of Rusty'sstock in the company. At the time of the distribution, the shares had a fair market value of $224 per share. Rusty's taxbasis in the shares was $50 per share Nail had total E&P of $8,185.000 at the time of the distribution.Problem 18-67 Part a (Algo)a. What are the amount and character (capital gain or dividend) of any income or gain recognized by Rusty because of the partialliquidation?per share

Partial liquidation - is related to the distribution made by a company due to the redemption of a…

Answered: Required Information Problem 18-67 (LO…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Nail Corporation made a distribution of $589, 110 to Rusty in partial liquidation of the company on December 31 of this year. Rusty, an individual, owns 100 percent of Nail Corporation. The distribution was in exchange for 50 percent of Rusty's stock in the company. At the time of the distribution, the shares had a fair market value of $219 per share. Rusty's tax basis in the shares was $ 50 per share. Nail had total E&P of $8,485,000 at the time of the distribution. a. What are the amount and character (capital gain or dividend) of any income or gain recognized by Rusty because of the partial liquidation? Capital gain/ Dividend . . . . . . . ./ per share b. Assuming Nail made no other distributions to Rusty during the year, by what amount does Nail reduce its total E&P because of the partial liquidation?
Cairns owns 75 percent of the voting stock of Hamilton, Incorporated. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2020, Hamilton sold $2,000,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 40 percent of these bonds at 92 percent of face value on January 1, 2022. Both companies utilize the straight-line method of amortization. Required: Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. December 31, 2022 December 31, 2023 December 31, 2024
Franklin Corporation owns 90 percent of the outstanding voting stock of Georgia Company. On January 2, 2009, Georgia sold 7 percent bonds payable with a $5,000,000 face value maturing January 2, 2029 at a premium of $500,000. On January 1, 2011, Franklin acquired 20 percent of these same bonds on the open market at 97.66. Both companies use the straight-line method of amortization. What adjustment should be made to Franklin's 2012 beginning Retained Earnings as a result of this bond acquisition? Provide detailed explanation
Exercise 19-30 (Algorithmic) (LO. 8) During the current year, Gnatcatcher, Inc., (E & P of $1,300,000) distributed $575,000 each to Brandi and Yuen in redemption of some of their Gnatcatcher stock. The two shareholders acquired their shares five years ago. Each shareholder is in the 32% tax bracket, and each had a $143,750 basis in the redeemed stock. Assume taxpayers in the 32% tax bracket are subject to the long-term capital gains and qualified dividends tax rate of 15%. If required, round your answers to nearest dollar. a. Assume that the distribution to Brandi is a qualifying stock redemption. The distribution is taxed as a sale or exchange Feedback Check My Work and Brandi's tax liability is $ b. Assume that the distribution to Yuen is a nonqualified stock redemption. The distribution is taxed a dividend and Yuen's tax liability is $
Required information Problem 18-67 (LO 18-5) (Algo) [The following information applies to the questions displayed below] Nail Corporation made a distribution of $589,110 to Rusty in partial liquidation of the company on December 31 of this year. Rusty, an individual, owns 100 percent of Nail Corporation. The distribution was in exchange for 50 percent of Rusty's stock in the company. At the time of the distribution, the shares had a fair market value of $219 per share. Rusty's tax basis in the shares was $50 per share. Nail had total E&P of $8,485,000 at the time of the distribution. Problem 18-67 Part a (Algo) a. What are the amount and character (capital gain or dividend) of any income or gain recognized by Rusty because of the partial liquidation? Answer is complete but not entirely correct. Capital gain $ 224 per share
Blue Corp. purchased 100% of the stock of Magenta Corp. in 1984 for $300,000. Early this year, Magenta was liquidated. Blue Corp. received all of Magenta’s assets, which had a basis to Magenta Corp. of $420,000 and a FMV of $440,000. Assume the requirements of §332 were satisfied. What about of gain will Blue Corp. recognize any gain as a result of the liquidation?
The stock in Ivory Corporation is owned by Gold Corporation (80%) and Imelda (20%). Gold Corporation purchased its shares in Ivory nine years ago at a cost of $650,000, and Imelda purchased her shares in Ivory four years ago at a cost of $175,000. Ivory Corporation has the following assets that are distributed in complete liquidation: Adjusted Basis Fair Market ValueCash $600,000 $600,000Inventory 80,000 200,000Equipment 350,000 200,000a. Assume that Ivory Corporation distributes the cash and inventory to Gold Corporation and the equipment to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?b. Assume that Ivory Corporation distributes the cash and equipment to Gold Corporation and the inventory to Imelda. What are the tax consequences of the distributions to Ivory Corporation, to Gold Corporation, and to Imelda?
Subject:
25. Cairns owns 75 percent of the voting stock of Hamilton, Inc. The parent's interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2020, Hamilton sold $1,000,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 9 percent payable every December 31. Cairns acquired 40 percent of these bonds at 96 percent of face value on January 1, 2022. Both companies utilize the straight-line method of amortization. Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. a. December 31, 2022 b. December 31, 2023 c. December 31, 2024

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