On March 1,Cream Corporation transfers all of its assets to Coffee Corporation in exchange for 10% of its common voting stock.At the time of the reorganization,Cream has assets valued at $4 million (basis of $3 million)and its earnings and profits account shows a deficit of $650,000.Coffee's earnings and profits as of March 1 were $420,000.Due to the reorganization,Coffee has an NOL for the current year of $150,000.Coffee still declares its usual dividends of $100,000,paid on April 30,August 31,and December 31 ($300,000 of total dividends).

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The Answer of On March 1,Cream Corporation transfers all of its assets to Coffee Corporation in exchange for 10% of its common voting stock.At the time of the reorganization,Cream has assets valued at $4 million (basis of $3 million)and its earnings and profits account shows a deficit of $650,000.Coffee's earnings and profits as of March 1 were $420,000.Due to the reorganization,Coffee has an NOL for the current year of $150,000.Coffee still declares its usual dividends of $100,000,paid on April 30,August 31,and December 31 ($300,000 of total dividends).

On March 1,Cream Corporation Transfers All of Its Assets to Coffee