A, B and C, all individuals, own, respectively, 50, 20 and 30 common shares of X Corp. with adjusted bases of 2,000, 3,000 and 1,000 respectively. They are the only shareholders of X. A is the parent of B. X has E&P of 2,000 accumulated as of the end of the prior year and no E&P in the current year. A transfers 25 X shares to X in exchange for 4,000 cash. What are all of the consequences to all of the parties?
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- A and B, both individuals, each owns 50 shares of X Corp. A and B have bases in theirX stock of 60 and 120 respectively. X has accumulated an E&P of 100. X distributes 10shares of common each to A and B. What consequences from this distribution?A owns 50 X Corp. common shares with an adjusted basis of 20,000. B owns 50 X common shares with an adjusted basis of 75,000. X has earnings and profits of 30,000 accumulated as of the end of the prior year. For the current year, X has taxable income of 85,000 just from operations. IN ADDITION, X has received IBM dividends of 10,000. Also (in addition to the operating income), note that X has engaged in a like-kind exchange in which X had a realized gain of 35,000 and a recognized gain of 0. Also (in addition to operating income) note that X has an net operating loss deduction in the current year (carried from a prior year) of 15,000. X distributes 100,000 to each A and B (i.e. A receives 100,000 and B receives 100,000). Describe all of the consequences to all of the parties.A & B are partners who share income in the ratio of 2:1 and who have capital balances of P 65 000 and P 35 000 respectively. If C, with the consent of B, acquired one half of A’s interest for P 40 000. For what amount would C’s capital account be credited? a. P 32 500 b. P 40 000 c. P 50 000 d. None of these
- George and Nancy form EB Corporation. George transfers land (basis of $100 and fair market value of $110) for 10 shares plus $10 cash. Nancy transfers $5 cash for 2 shares in EB Corporation. Provide information about recognized gain and stock basis]Brett and Illain formed a new Corporation by transferring the following assets in exchange for stock:▪ Brett transferred: Property subject to a 70,000 mortgage; FMV $1,000000, Basis 500,000. In exchange, she received 200 shares of Stock and relief of the mortgage liability. ▪ Illain transferred: Inventory with a Basis of 15,000 and FMV 150,000. Required:a. What is Brett’s basis in the stock she received b. What is Brett’s recognized gain/lossSee the problem in the photo below. On this date, the partnership was dissolved and its net assets transferred to a newly-formed corporation. The fairvalue of the assets was P24,000 more than the carrying value on the firm’s books. Each of the partners was issued10,000 shares of the corporation’s P1 par ordinary share. Prepare the journal entries in the books of the corporation.
- 16. Soozie transfers real estate to the Palladium Corporation in exchange for stock possessing 85% of the combined voting power of all classes of stock entitled to vote and 70% of the total number of shares of all other classes of stock. No other exchanges of property for stock of Palladium Corporation occurred at or near the time of the transfer by Soozie. The real estate Soozie transferred had an adjusted basis of $600,000 and a fair market value of $950,000 at the time of the transfer, while the stock had a fair market value of $875,000 at the time of the transfer. As a result of the transfer: a. Soozie recognizes gain of $350,000. b. Soozie recognizes gain of $275,000. c. Soozie recognizes a loss of $75,000. d. Soozie recognizes no gain or loss. e. None of the above.During the year, R and S formed C Corporation. For each of the following independent situations, indicate whether § 351 applies to the exchange. a. R contributed property worth $70,000 (basis $50,000) in exchange for 70 shares of stock, and S contributed services worth $30,000 in exchange for 30 shares of stock. b. R contributed property worth $70,000 (basis $50,000) in exchange for 70 shares of stock, and S contributed services worth $25,000 for 25 shares of stock in addition to property worth $5,000 for 5 shares of stock. c. R contributed property worth $70,000 (basis $50,000) in exchange for 70 shares of stock, and S contributed services worth $29,000 for 29 shares in addition to cash of $1,000 for 1 share.George and Nancy form EB Corporation. George transfers land (basis of $100 and fair market value of S110) for 10 shares plus $10 cash. Nancy transfers $5 cash for 2 shares in EB Corporation, what gains do george and Nancy recognize, what is the stock basis
- (a) Leigh, a public limited company, purchased the whole of the share capital of Hash, a limited company, on 1 June 20X6. The whole of the share capital of Hash was formerly owned by the five directors of Hash and under the terms of the purchase agreement, the five directors were to receive a total of three million ordinary shares of $1 of Leigh on 1 June 20X6 (market value $6 million) and a further 5,000 shares per director on 31 May 20X7, if they were still employed by Leigh on that date. All of the directors were still employed by Leigh at 31 May 20X7. Leigh granted and issued fully paid shares to its own employees on 31 May 20X7. Normally share options issued to employees would vest over a three-year period, but these shares were given as a bonus because of the company's exceptional performance over the period. The shares in Leigh had a market value of $3 million (one million ordinary shares of $1 at $3 per share) on 31 May 20X7 and an average fair value of $2.5 million (one…Accounting On March 19, 2022, Rick and Michelle form Road Runner Corporation as equal 50/50 shareholders with the following investment, for which each received 10,000 shares of Road Runner stock: Rick Cash From Michelle Equipment (basis $100,000; fair market value $50,000) $ 50,000 Land (basis $600,000; fair market value $850,000) From $900,000 $850,000 a. Tax consequences of this formation? b. Would your answer change if Rick contributed just $850,000 because Michelle's equipment was subject to a liability of $50,000, which Road Runner assumed? c. Would your answer change if Rick contributed $900,000 in return for 10,000 shares but Michelle instead received $9,000 in cash and 9,900 shares (worth $891,000) of stock of Road Runner in return for her contribution of land & equipment, and the equipment was not subject to a liability?Q. No. 3 - X Ltd. owns all of the shares of Y Ltd. The shares of Y have an adjusted cost base of $40,000 and a fair market value of $940,000. Y has retained earnings of $100,000 (earned after 1971) and no eligible or non-eligible refundable dividend tax on hand. Y plans to pay a dividend of $900,000 to X. Subsequently, X will sell the shares of Y Ltd. to an arm's-length person for $40,000. Determine the tax consequences to X Ltd. of these transactions.