U-Pick Fruit Corp., a C Corporation, was formed many years ago as a "you pick" farm where customers can pick various types of fruits fresh from the source. Strawberry owned 500 out of 1,000 shares of common stock of U-Pick Fruit Corp. Her basis in the stock was $5,500,000. U-Pick Fruit Corp. liquidated, and in the process, after the corporation paid all of its debts, it distributed to Strawberry the following assets: • $11 million in cash, and • Berryacre, a parcel of real estate previously used in its trade or business (U-Pick Fruit's adjusted basis in Berryacre was $16,500,000 and the fair market value at date of distribution was $55,000,000). How much gain (loss) does Strawberry recognize due to these transactions? $38,500,000 $44,000,000 $60,500,000

U-Pick Fruit Corp., a C Corporation, was formed many years ago as a "you pick" farm where customers can pick various types of fruits fresh from the source. Strawberry owned 500 out of 1,000 shares of common stock of U-Pick Fruit Corp. Her basis in the stock was $5,500,000. U-Pick Fruit Corp. liquidated, and in the process, after the corporation paid all of its debts, it distributed to Strawberry the following assets: • $11 million in cash, and • Berryacre, a parcel of real estate previously used in its trade or business (U-Pick Fruit's adjusted basis in Berryacre was $16,500,000 and the fair market value at date of distribution was $55,000,000). How much gain (loss) does Strawberry recognize due to these transactions? $38,500,000 $44,000,000 $60,500,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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U-Pick Fruit Corp., a C Corporation, was formed many years ago as a "you pick" farm where customers can pick various types of fruits fresh from the source. Strawberry owned 500 out of 1,000 shares of common stock of U-Pick Fruit Corp. Her basis in the stock was $12,500,000. U-Pick Fruit Corp. liquidated, and in the process, after the corporation paid all of its debts, it distributed to Strawberry the following assets: • $25 million in cash, and • Berryacre, a parcel of real estate previously used in its trade or business (U-Pick Fruit's adjusted basis in Berryacre was $37,500,000 and the fair market value at date of distribution was $125,000,000). How much gain (loss) does Strawberry recognize due to these transactions? $87,500,000 $137,500,000 $112,500,000 $100,000,000
Citrus Corporation is a calendar year S corporation with the following current year information: Operating loss Liabilities: Notes payable, Big Apple Bank. 40,000 Notes payable, Grapefruit (individual) 40,000 $(240,000) On January 1, Orange (an individual) bought 50% of Citrus Corporation stock for $60,000. How much of the operating loss may Orange deduct currently? Assume the excess business loss limitation does not apply. O $80,000 $60,000 o $100,000 $120,000
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