78) Jack Corporation is owned 75% by Sherri and 25% by Mark. Sherri and Mark have $125,000 and $50,000 bases in their stock, respectively. Jack Corporation adopts a plan of liquidation on March 1. On April 12, Sherri receives the following property as a liquidating distribution: cash of $30,000; land, $125,000 FMV; and 150 shares of Green Corporation stock, $30,000 FMV. The land is subject to a $20,000 mortgage. On the same date, Mark receives $10,000 FMV of Green stock (50 shares) and cash of $45,000 as a liquidating distribution. The land has a basis of $50,000 and the stock has a basis of $70,000 in Jack Corporations hands. Both are capital assets to Jack Corporation and have been held for a number of years. a) What is the amount and character of Jack Corporations recognized gain or loss on the liquidating distributions? b) What are the amounts and characters of Sherri and Marks recognized gains or losses? c) What are the bases of the land and stock to Sherri and Mark?

79) How is the gain/loss calculated if a shareholder has acquired stock at different times and at varying prices? 2

80) Specialty Corporation distributes land to one of its shareholders, Sam, as part of a plan of liquidation. The land, which was used in Specialtys business, has an adjusted basis of $50,000 and an FMV of $130,000 on the date of distribution. Sams basis in Specialty Corporation stock is $100,000. What is the amount and character of the gain/loss recognized by Specialty Corporation? What is the amount and character of the gain/loss recognized by Sam?

81) What event determines when a cash or accrual method of accounting taxpayer reports a liquidating distribution?

82) Under Illinois Corporations plan of liquidation, the corporation distributes land to one of its shareholders, Springer. The land, which is used in Illinois trade or business, has a $20,000 adjusted basis and a $60,000 FMV on the distribution date. What are the tax consequences of this distribution to Illinois and Springer?

83) Parent Corporation owns 100% of the stock of Subsidiary Corporation. The adjusted basis of its stock investment is $100,000. A plan of liquidation is adopted. Subsidiary distributes to Parent assets with a $325,000 FMV and a $275,000 adjusted basis. Subsidiary also distributes liabilities in the amount of $40,000. Subsidiary has a $150,000 E&P balance. a) What is the amount and character of Subsidiary Corporations recognized gain or loss on the distribution? b) What is the amount and character of Parent Corporations recognized gain or loss on the redemption of the Subsidiary stock? c) What basis does Parent take in the assets? d) What happens to parent Corporations basis in the Subsidiary stock and to Subsidiarys tax attributes?

84) Parent Corporation owns 80% of the stock of an insolvent subsidiary corporation. Vic owns the remaining 20% of the stock. The courts determine the subsidiary to be bankrupt, and the shareholders receive nothing for their investment. How do they report their losses?

Answer rating: 100% (QA)

78 a Jack Corporations recognized gain or loss Cash received 30000 FMV of land 125000 FMV of Green Corporation stock 30000 Total FMV 30000 cash 125000 ... View the full answer