Required information [The following information applies to the questions displayed below.] Shauna and Danielle decided to liquidate their jointly owned corporation, Woodward Fashions Incorporated (WFI). After liquidating its remaining inventory and paying off its remaining liabilities, WFI had the following tax accounting balance sheet: FMV Cash Building Land $ 200,000 50,000 150,000 Adjusted Tax Basis $ 200,000 10,000 90,000 Appreciation 40,000 60,000 $ 400,000 $ 300,000 $ 100,000 Total Under the terms of the agreement, Shauna will receive the $200,000 cash in exchange for her 50 percent interest in WFI. Shauna's tax basis in her WFI stock is $50,000. Danielle will receive the building and land in exchange for her 50 percent interest in WFI. Danielle's tax basis in her WFI stock is $100,000. 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. d. What is Danielle's tax basis in the building and land after the complete liquidation? Building Land Tax basis
Required information [The following information applies to the questions displayed below.] Shauna and Danielle decided to liquidate their jointly owned corporation, Woodward Fashions Incorporated (WFI). After liquidating its remaining inventory and paying off its remaining liabilities, WFI had the following tax accounting balance sheet: FMV Cash Building Land $ 200,000 50,000 150,000 Adjusted Tax Basis $ 200,000 10,000 90,000 Appreciation 40,000 60,000 $ 400,000 $ 300,000 $ 100,000 Total Under the terms of the agreement, Shauna will receive the $200,000 cash in exchange for her 50 percent interest in WFI. Shauna's tax basis in her WFI stock is $50,000. Danielle will receive the building and land in exchange for her 50 percent interest in WFI. Danielle's tax basis in her WFI stock is $100,000. 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. d. What is Danielle's tax basis in the building and land after the complete liquidation? Building Land Tax basis
Chapter4: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 43P
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![Required information
[The following information applies to the questions displayed below.]
Shauna and Danielle decided to liquidate their jointly owned corporation, Woodward Fashions Incorporated (WFI). After
liquidating its remaining inventory and paying off its remaining liabilities, WFI had the following tax accounting balance
sheet:
FMV
Cash
Building
Land
$ 200,000
50,000
150,000
Adjusted Tax
Basis
$ 200,000
10,000
90,000
Appreciation
40,000
60,000
$ 400,000
$ 300,000
$ 100,000
Total
Under the terms of the agreement, Shauna will receive the $200,000 cash in exchange for her 50 percent interest in WFI.
Shauna's tax basis in her WFI stock is $50,000. Danielle will receive the building and land in exchange for her 50 percent
interest in WFI. Danielle's tax basis in her WFI stock is $100,000. 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.
d. What is Danielle's tax basis in the building and land after the complete liquidation?
Building
Land
Tax basis](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee2a23be-e5ad-41f6-a5dd-8d43312b1ff4%2F82efd138-e8f4-4457-a6a0-d40bbc54e29b%2Fl2l33ck_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Shauna and Danielle decided to liquidate their jointly owned corporation, Woodward Fashions Incorporated (WFI). After
liquidating its remaining inventory and paying off its remaining liabilities, WFI had the following tax accounting balance
sheet:
FMV
Cash
Building
Land
$ 200,000
50,000
150,000
Adjusted Tax
Basis
$ 200,000
10,000
90,000
Appreciation
40,000
60,000
$ 400,000
$ 300,000
$ 100,000
Total
Under the terms of the agreement, Shauna will receive the $200,000 cash in exchange for her 50 percent interest in WFI.
Shauna's tax basis in her WFI stock is $50,000. Danielle will receive the building and land in exchange for her 50 percent
interest in WFI. Danielle's tax basis in her WFI stock is $100,000. 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.
d. What is Danielle's tax basis in the building and land after the complete liquidation?
Building
Land
Tax basis
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