7 The stock of Quail Corporation is held as follows: 80% by Pheasant Corporation and 20% by Gisela, an individual. Quail Corporation isliquidated in December of the current year pursuant to a plan adopted earlier in the year. At the time of its liquidation, Quail Corporationhas assets with a basis of $1,476,200 and fair market value of $2,066,680. Quail Corporation distributes the property pro rata to PheasantCorporation and to Gisela.If an amount is zero or there is no gain or loss, enter "0". If required, round your answers to the nearest dollar.a. What is Quail's recognized gain or loss on the distribution of property to Pheasant?Because the liquidation of Quail is aliquidating distributions to Pheasant.liquidation, Quail recognizesb. What is Quail's recognized gain or loss on the distribution of property to Gisela?Because Gisela isQuail recognizesof $onof $on the distribution of property toGisela.

Upon complete liquidation, a corporation calculates gain or loss by comparing the fair market value…

Answered: The stock of Quail Corporation is held…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 15CE

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The stock of Quail Corporation is held as follows: 85% by Pheasant Corpo- ration and 15% by Gisela, an individual. Quail Corporation is liquidated in December of the current year pursuant to a plan adopted earlier in the year. At the time of its liquidation, Quail Corporation has assets with a basis of $730,000 and fair market value of $1,000,000. Quail Corporation distributes the property pro rata to Pheasant Corporation and to Gisela. Compute Quail’s recognized gain or loss on the distribution of property to Pheasant. Compute Quail’s recognized gain or loss on the distribution of property to Gisela.
The stock in Toucan Corporation is held equally by two brothers. Four years ago, the shareholders transferred property (basis of $200,000, fair market value of $220,000) to Toucan Corporation as a contribution to capital. In the current year and pursuant to a complete liquidation of Toucan, the property is distributed proportionately to the brothers. At the time of the distribution, the property had a fair market value of $40,000. What amount of loss will Toucan Corporation recognize on the distribution of the property? Oa. $160,000 Ob. $0 Oc. $20,000 Od. $180,000
BuyCo, Incorporated, holds 21 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $10,000 per year. For 2023, Marqueen reported earnings of $108,000 and declares cash dividends of $32,000. During that year, Marqueen acquired inventory for $49,000, which it then sold to BuyCo for $70,000. At the end of 2023, BuyCo continued to hold merchandise with a transfer price of $27,000. a. What Equity in Investee Income should BuyCo report for 2023? b. How will the intra-entity transfer affect BuyCo's reporting in 2024? c. If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change? a. Equity in investee income $ 15,050 b. Equity accrual for 2024 will be increased by $ 25,050 c. If BuyCo had sold the inventory to Marqueen, would your answers to parts (a) and (b) change? No
Reyes Corp. owned 70% of the voting common stock of Lee Co. During 2021, Lee sold a parcel of land to Reyes. The land had a book value of $87,000 and was sold to Reyes for $138,000. Lee's reported net income for 2021 was $127,000. Required: Assuming there are no other intra-entity transactions nor excess amortizations, what was the net income attributable to the noncontrolling interest of Lee? Due to the sale of land being an upstream sale, and not sold to an external entity the Gain would be deferred each year.
On January 18th of the current year, J Inc. acquired 85% of the shares of K Inc. from an arm’s length person. At that time, K Inc. owned two non-depreciable capital assets: Land (Value $200,000; Adjusted cost base $280,000) and Investment in X Inc. (Value $35,000; Adjusted cost base $30,000). What is the amount of the reduction required to the adjusted cost base of the assets?
BuyCo, Inc., holds 23 percent of the outstanding shares of Marqueen Company and appropriately applies the equity method of accounting. Excess cost amortization (related to a patent) associated with this investment amounts to $12,000 per year. For 2020, Marqueen reported earnings of $117,000 and declares cash dividends of $32,000. During that year, Marqueen acquired inventory for $45,000, which it then sold to BuyCo for $75,000. At the end of 2020, BuyCo continued to hold merchandise with a transfer price of $26,000. What Equity in Investee Income should BuyCo report for 2020? How will the intra-entity transfer affect BuyCo’s reporting in 2021? If BuyCo had sold the inventory to Marqueen, would the answers to (a) and (b) have changed?
Prime, Inc., owns 100% of Steak Corporation. For the current year, Prime reports net income from own operations (without consideration of its investment in Steak and Steak's income) of $217,000 and Steak reports $93,250. Prime had a bond payable outstanding on January 1, with a carrying amount of $267,700. Steak acquired the bond on that date for $246,000. During the current year, Prime reported interest expense of $15,190 while Steak reported interest income of $12,190, both related to the intra-entity bond payable. What is consolidated net income
Sub Corporation is a wholly owned subsidiary of Parent Corporation. Sub Corp has three assets: Cash $20,000; Inventory FMV $200,000, AB $140,000; Land FMV $180,000, AB $210,000. Sub adopts a formal plan of liquidation and immediately thereafter distributes its assets to Parent. Parent's adjusted basis in its Sub Corporation stock was equal to $285,000. Parent had acquired Sub Corporation six years prior to the liquidation. What are the tax consequences of this liquidation to Parent Corp and Sub Corp? Sub Corporation is owned 95% by Parent Corporation and 5% by Brian an unrelated person. Sub Corp has three assets: Equipment FMV $20,000, AB $6,000; Inventory FMV $200,000, AB $140,000; Land FMV $180,000, AB $210,000. Sub adopts a formal plan of liquidation and immediately thereafter distributes its assets to Parent. Parent's adjusted basis in its Sub Corporation stock was equal to $285,000 and Brian's adjusted basis in his Sub stock was equal to $13,500. Parent Corp and Brian had acquired…
On January 1, 2018, Enron Company purchased for cash 40 percent of Walt Company’s 450,000 shares of common stock for $1,800,000 when 40 percent of the equity in Walt’s net assets was $2,610,000. The payment in excess of book value was assigned to depreciable assets with a remaining life of six years. As a result of this transaction, Enron has the ability to control Walt’s operating and financial policies. Walt’s net income for the year ended December 31, 2018, was $900,000. During 2018, Walt paid $487,500 in dividends to its shareholders. What is the method, why, for consolidation and how much would be the income reported by Enron for its investment in Walt.
s
Bethel Corporation distributed $125,000 to its shareholders on December 31, 1997, the end of its taxable year. Bethel's capital structure was as follows: Capital stock--5,000 shares issued and outstanding $500,000 Current earnings and profits 1/1/97 - 12/31/97 $ 15,000 Accumulated earnings and profits 3/1/93 - 12/31/96 $ 75,000 Mr. Rutland held 200 shares of Bethel Corporation's stock. His basis in the stock was $100 per share. How much of the Bethel Corporation distribution is a dividend to Mr. Rutland? Which answer is correct to this question? A)$1400; B)3,000; C)3,600; D)$5,000
On January 2, year 1, an entity purchased a 30% interest in Tod Co. for 250,000. On this date, Tod’s stockholders’ equity was 500,000. The carrying amounts of Tod’s identifiable net assets approximated their fair values, except for land whose fair value exceeded its carrying amount by 200,000. Tod reported net income of 100,000 for year 1, and paid no dividends. The entity accounts for this investment using the equity method. In its December 31, year 1 balance sheet, what amount should the entity report as investment in subsidiary?

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