Cornflower Corporation distributes equipment (adjusted basis of $70,000, fair market value of $55,000) to its shareholder, Roy. Assume that Cornflower has more than $100,000 of current E & P. What are the tax consequences to Cornflower Corporation and to Roy?
Answer to relevant QuestionsIris Corporation owns 30% of Fresia Corporation's stock. On November 15, Fresia Corporation, with current E & P of $320,000, distributes land (fair market value of $100,000; basis of $160,000) to Iris. The land is subject to ...Ochre Corporation's board of directors decides to distribute property to its shareholders rather than pay a cash dividend. Why might Ochre's board make this decision? Explain the requirements for a redemption to pay death taxes. What are the tax consequences of a redemption to pay death taxes for the share holder and the corporation? Discuss the tax consequences to the parent corporation in a § 332 liquidation of a subsidiary. Corporate shareholders typically prefer dividend treatment on a stock redemption. Why?
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