Question: Emily and Freda are negotiating with George to purchase the

Emily and Freda are negotiating with George to purchase the business he operates as Pelican, Inc. The assets of Pelican, Inc., a C corporation, are as follows.
*Potential depreciation recapture is $45,000.
**The straight-line method was used to depreciate the building. Accumulated depreciation is $340,000.
George’s basis for the Pelican stock is $560,000. George is subject to a 35% marginal tax rate, and Pelican faces a 34% marginal tax rate.
a. Emily and Freda purchase the stock of Pelican from George for $908,000. Determine the tax consequences to Emily and Freda; Pelican; and George.
b. Emily and Freda purchase the assets from Pelican for $908,000. Determine the tax consequences to Emily and Freda; Pelican; and George.
c. The purchase price is $550,000 because the fair market value of the building is $150,000, and the fair market value of the land is $50,000. No amount is assigned to goodwill. Emily and Freda purchase the stock of Pelican from George. Determine the tax consequences to Emily and Freda; Pelican; and George.


$1.99
Sales4
Views183
Comments
  • CreatedMay 25, 2015
  • Files Included
Post your question
5000