Question 1

Lafayette Corporation distributes $80,000 in cash along with land having a $40,000 adjusted basis and a $70,000 FMV to its shareholder,Gus.The corporation has accumulated substantial earnings and profits.
a.What are the tax consequences to Lafayette Corporation?
b.What are the tax consequences to the shareholder?
c.What is the shareholder's basis in the land?

Accepted Answer

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Question 2

Additional capital may be obtained by a corporation by issuing debt securities or equity securities.What advantages result from issuing debt in the capital structure?

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Question 3

Discuss the tax consequences of a complete liquidation to the liquidated corporation and to the shareholders.

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Question 4

What factors are considered in determining whether a redemption will be treated as an exchange subject to capital gain or loss treatment?

Accepted Answer

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Question 5

How does the treatment of a liquidation of a subsidiary into its parent corporation differ from the general rule?

Accepted Answer

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Question 6

Tara and Jeff wish to form TJ Corporation.They have determined that they need initial capitalization of $1,000,000.What tax issues should they consider when determining whether to issue stock only or some combination of debt and equity?

Accepted Answer

The answer of Tara and Jeff wish to form TJ...

Question 7

Pursuant to a complete liquidation,Southern Electric Corporation distributes the following assets to its shareholders:
Inventory: $15,000 basis,$20,000 FMV
Land held as an investment: $10,000 basis,$40,000 FMV
Marketable securities: $35,000 basis; $30,000 FMV
What are the tax consequences to Southern Electric Corporation?

Accepted Answer

The answer of Pursuant to a complete liquidation,Southern Electric Corporation...

Question 8

Whaler Corporation makes a liquidating distribution of land with a $70,000 adjusted basis and a $100,000 FMV to shareholder Horton,who surrenders his Whaler stock (adjusted basis $60,000)to the corporation.Alice,another shareholder,receives $100,000 cash for her shares ($115,000 adjusted basis).What are the tax consequences to both Horton and Alice and what is Horton's basis in the land?

Accepted Answer

The answer of Whaler Corporation makes a liquidating distribution of...

Quiz 32: Corporations

Additional capital may be obtained by a corporation by issuing debt securities or equity securities.What advantages result from issuing debt in the capital structure?

Discuss the tax consequences of a complete liquidation to the liquidated corporation and to the shareholders.

What factors are considered in determining whether a redemption will be treated as an exchange subject to capital gain or loss treatment?

How does the treatment of a liquidation of a subsidiary into its parent corporation differ from the general rule?

Tara and Jeff wish to form TJ Corporation.They have determined that they need initial capitalization of $1,000,000.What tax issues should they consider when determining whether to issue stock only or some combination of debt and equity?