Parent Corporation purchased 75% of Subsidiary Corporation seven years ago, Subsidiary's current balance sheet shows the following figures


1) Parent Corporation purchased 75% of Subsidiary Corporation seven years ago, Subsidiary's current balance sheet shows the following figures
Basis Value
Demand Deposit $20,000 $20,000
IBM Stock 30,000 50,000
Parking lot 5000 30,000
Building 0 1,00,000
Mortgage -15,000 -15,000
Subsidiary has a net operating loss carryover of $7000 and earnings and profits of $22,000
Subsidiary redeems Roy Ramble's 25% stock interest in exchange for the IBM stock. Subsidiary then adopts a plan of complete liqudiation and distributes its assets to Parent in complete liqudiation.
a) What is the tax result to Roy? 
b) Does subsidiary recognize any gainon the redemption of the liqudiation? 
c) What are Parent's bases for the assets received? 
d) What happens to Subsidiary's NOL and EP? 
2) 
Mini-Skirts ltd owned by one shareholde, owns one asset a building worth $100,000 with a zero basis. The shareholder's stock basis is $20,000.  A plan of compelte liqudiation is adopted. What are the tax consequences to both parties in each of the following independent cases?
a. The building is deeded to the shareholder, Bill Jones, who is taxed under Code Sec 331.
b. The building is sold for an installment note that is ditributed to Bill.
c. Mini-Skirts Ldt sells the building and presents a cashier's check for $100,000 to Bill.
d. The building is deeded to the shareholder, Bill Inc, in a Code Sec 332 liquidation. 
3) 
Label the following transactions:
a. A Nevada corporation formed a corporation in Florida and transferred all assets to it for 100 % of its stock. It then distributed the stock to its shareholders in cancellation of their Nevada corporation stock and was dissolved.
b. ABC Corp. acuired all the stock of MNO Corp. for its convertible bonds. ALL MNO assets were transferred to ABC, whereupon MNO was dissolved.
c. A corporation issues $30,000 worth of its own voting stock to retire some of its outstanding bonds with a principal amount of $40,000.
d. Convertible preffered stock is converted into common stock of the issuing corporation.
e. A corporation incorporates a division and distributes the shares received pro-rata to its shareholders.
f. A corporation distributes preferred stock for each 10 shares of common stock outstanding. 






























6) 
An S corporation has the following information:
Sales 1,00,000
Dividend income 1,500
Tax-exempt interest  2500
Long-term capital gain 4,000
Short-term capital gain  1,800
Cost of goods sold 50,000
Advertising expense 3,000
Charitable contributions 1,000
Interest expense 2,000
Salary expense 25,000
Other operating expenses 8,000
Computer the S corporation taxable income for the year.

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