The gross estate of Raul, decedent, includes stock in Iris Corporation (E & P of $3 million) valued at $2.5 million. At the time of his death, Raul owned 60% of the Iris stock outstanding, and he had a basis of $420,000 in the stock. The death taxes and funeral and administration expenses related to Raul's estate amount to $1 million, and the adjusted gross estate is $7 million. The remainder of the Iris stock is owned by Monica, Raul's daughter and sole heir of his estate. What are the tax consequences to Raul's estate if Iris Corporation distributes $2.5 million to the estate in redemption of all of its stock in the corporation?
Answer to relevant QuestionsBriefly discuss the requirements for a redemption to qualify as a not essentially equivalent redemption. Last year, Lory Corporation, a land development company, acquired land and construction equipment from its sole shareholder in a § 351 transaction. At the time, the land had a basis of $790,000 and a fair market value of ...Orange Corporation purchased bonds (basis of $350,000) of its wholly owned subsidiary, Green Corporation, at a discount. Upon liquidation of Green pursuant to § 332, Orange receives payment in the form of land worth ...Shelly Zumaya (2220 East Hennepin Avenue, Minneapolis, MN 55413) is the president and sole shareholder of Kiwi Corporation (stock basis of $400,000). Incorporated in 2004, Kiwi Corporation's sole business has consisted of ...Determine whether the following transactions are taxable. If a transaction is not taxable, indicate what type of reorganization is effected, if any. a. Alpha Corporation owns assets valued at $400,000 and liabilities of ...
Post your question