Question: The BPL Corporation is considering selling investment land to Kaier
The BPL Corporation is considering selling investment land to Kaier Partnership for the land’s independently appraised FMV of $1.2 million. BPL purchased the land 20 years ago for $1.32 million cash. Mr. Larry Bass is the largest shareholder in BPL; he owns 892 of 2,000 BPL shares outstanding. Larry’s sister, Mrs. Ann Olsen, owns 165 BPL shares, and various investors who are unrelated to Larry and Ann own the remaining shares outstanding. Ann is a limited partner in Kaier Partnership; she owns a 35 percent interest in Kaier’s profits and capital. Ann’s daughter, Suzanne Olsen, owns a 22 percent limited interest in Kaier’s profits and capital. Ann and Suzanne are unrelated to any other Kaier partner and are not involved in any aspect of the manage-ment of the partnership. If BPL sells its land to Kaier Partnership, can it recognize the $120,000 loss that it will realize on the sale?
Answer to relevant QuestionsFirm Z, a corporation with a 35 percent tax rate, has $100,000 to invest in year 0 and two investment choices. Investment 1 will generate $12,000 taxable cash flow annually for years 1 through 5. In year 5, the firm can sell ...Four years ago, Company PJ acquired 1,000 acres of undeveloped land. On the date of the exchange, the land’s FMV was $700,000. During the past four years, the land appreciated in value by $600,000; a recent appraisal ...XYZ exchanged old equipment for new like-kind equipment. XYZ’s adjusted basis in the old equipment was $13,000 ($30,000 initial cost − $17,000 accumulated depreciation), and its FMV was $20,000. Because the new equipment ...On October 18, 2015, a flood washed away heavy construction equipment owned by Company K. The adjusted tax basis in the equipment was $416,000. On December 8, 2015, Company K received a $480,000 reimbursement from its ...In 2009, SW purchased 1,000 shares of Delta stock. On May 20 of the current year it sold these shares for $90 per share. In each of the following cases, compute SW’s recognized gain or loss on this sale: a. SW’s cost ...
Post your question