For the last eleven years, Lime Corporation has owned and operated four different trades or businesses. Lime
Question:
Determine whether either of the following independent transactions qualify as partial liquidations under § 302(b)(4). In each transaction, determine the tax consequences to Lime, to Turquoise, and to Sultan. Lime holds E & P of $2.1 million on the date of the distribution. Lime redeems 250 shares from each shareholder.
a. Lime sells one of its business lines (basis $500,000, fair market value $700,000) and distributes the proceeds equally to Sultan and Turquoise.
b. Lime equally distributes stock (basis $425,000, fair market value $700,000) that it holds in other corporations to Sultan and Turquoise.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
South Western Federal Taxation 2015 Essentials Of Taxation Individuals And Business Entities
ISBN: 9781285438290
18th Edition
Authors: James Smith, William Raabe, David Maloney, James Young
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