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- (3) XYZ Corporation redeems a portion of its stock owned by one of its shareholders, Black. The corporation redeems Black's shares by distributing to him a parcel of real property with a FMV of $420,000 and an adjusted basis in the hands of XYZ Corporation of $245,000. What is the amount of gain, if any; XYZ Corporation will recognize that under the following circumstances? (a) The redemption fails to satisfy any of the tests of §302(b) and therefore fails to fit within the provisions of §302(a) and is required to be tested under §301? (b) The redemption satisfies the test set forth in §302(b)(2) and therefore does fit within the provisions of §302(a).A corporation sells property (basis of $750,000) to its sole shareholder for $450,000, the fair market value of the property. With respect to the sale: MPC Corporation makes a property distribution on 12/31/16 to its sole shareholder, Jon. The property distributed is a house (fair market value of $400,000; basis of $300,000) that is subject to a $150,000 mortgage that Jon assumes. Before considering the consequences of the distribution, MPC’s current E & P before the distribution is $175,000 and its accumulated E & P is $100,000. MPC makes no other distributions during the current year. What is MPCs taxable gain on the distribution of the house? What is MPC’s current E&P after the distribution on 12/31/16? What is Jon’s taxable gain (if any) and what type of gain is it? What is Jon’s basis in the house?Check my answer. Adam transfers property with an adjusted basis of $50,000 (fair market value of $400,000) to Swift Corporation for 90% of the stock. The property is subject to a liability of $60,000, which Swift assumes. What is the basis of the Swift stock to Adam? Section 357 provides when the acquiring corporation a liability is a section 351 transaction, the liability is not treated as a boot received for gain purposes, but is used in determining the basis of the stock received. The basis of the property transferred is $50,000, Liability assumed is $60,000. The basis of the stock received is $0.0 What is the basis of the property to Swift Corporation? The basis of the property received by the corporation is greater than the adjusted basis or the debt assumed. Swifts basis in the property is $60,000
- Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders. The property was subject to a $230,000 mortgage, which the shareholder assumed. Global has ample E & P to cover any distribution made during the year. What is the amount of the shareholder’s dividend income on the distribution? What is the shareholder’s basis in the property received? For the shareholder: What is the amount of the distribution? What is the basis of the property in the shareholder's hands? For the corporation: Is a gain or loss recognized as a result of the distribution? What is the effect of the distribution on E & P?2. Santiago transfers real estate with an adjusted basis of $400,000 and fair market value of $550,000 to the newly formed Star Corporation in exchange for 100% of its stock. The corporation assumes the liability on the transferred real estate in the amount of $425,000. What is Santiago's basis for his stock?Plainwell Ice Cream Corporation distributed property with a $300,000 fair market value and $20,000 adjusted basis to Luis, one of its shareholders. The property was subject to a $150,000 mortgage, which Luis assumed. Plainwell Ice Cream Corporation E & P is $200,000. How much of the property distribution is treated as dividend income, if any? How much gain, if any, does Plainwell Ice Cream Corporation recognize?
- Gamma Corporation distributes land to its sole shareholder, Lisa. The land has a basis to the corporation of $20,000 and a fair market value of $50,000. There is a $35,000 mortgage on the land which the shareholder agrees to assume. Before this distribution, Gamma has current E&P of $5,000 and accumulated E&P of $4,000. How much gain does Gamma Corporation recognize as a result of this distribution? How much dividend income does Lisa recognize as a result of this distribution? What is Lisa’s basis for the land? What is Gamma Corporation’s E&P after the distribution?Pat Middleton owns a non-depreciable capital asset that originally cost $20,000 and is now worth $80,000. Pat transfers the asset to a corporation, receiving as payment debt of $60,000 and preferred shares with a value of $20,000. Pat and the corporation will elect under Section 85 to avoid paying tax on the transfer. Determine the appropriate transfer price under Section 85. Determine the cost of the asset for the corporation, and the ACB and PUC for the preferred shares received as consideration.In a Section 351 transaction, Moustapha transfers property to a corporation with a fair market value of $100, a basis of $40, subject to a liability of $25, and receives only stock with a fair market value of $75. The liability was incurred 10 years ago when Moustapha purchased the property. The corporation assumes the liability and will use the property in its business. What is Moustapha's basis in the stock received? 65
- Hippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the saleQ.2. In a complete liquidation, Corporation Z distributes a building with adjusted tax basis of $200,000 and fair market value of $300,000 to its shareholder, Z. The shareholder assumes the liability on the building equal to $325,000. Z has basis in their stock of $50,000. Immediately after this transaction, what is the shareholder’s basis in the building? 275,000 200,000 325,000 300,000Tax Consequences to Shareholders. R Corporation, which has substantial E&P, redeems 50 of T's 70 shares (basis of $100 per share) for $60,000. a. What effect does the redemption have on T's taxable income and the basis for his stock, assuming the transaction qualifies as a sale? b. What effect does the redemption have on T's taxable income and the basis for his stock, assuming the distribution does not qualify for sale treatment