Alpha Corporation purchases all of Theta Corporation’s stock for $300,000 cash. Alpha makes a timely Sec. 338 election. Theta’s balance sheet at the close of business on the acquisition date is as follows:

a. What is the aggregate deemed sale price for the Theta assets (assume a 34% corporate tax rate)?

b. What amount and character of gain or loss must Theta recognize on the deemed sale?

c. What is the adjusted grossed-up basis for the Theta stock? What basis is allocated to each of the individual properties?

d. What happens to “old” Theta’s tax attributes? Do they carry over to “new” Theta?

e. What amount (if any) of goodwill can Theta amortize following the acquisition? Over what period and under what method may Theta amortize the goodwill?

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Assets Adjusted Basis FMV Liabilities and Equity Amount Accounts payable Note payable Owner's equity Cash S 50,000 S 50,000 S 40,000 38,000 65,000 43,000 Marketable securities 18,000 60,000 Accounts receivable 66,000 300,000 Inventory (FIFO) 21,000 Equipmenta 95,000 144,000 Land 6,000 12,000 Building 24.000 48,000 Total Total S400,000 The equipment cost 5200,000. OThe building is MACRS property on which Theta has claimed S10,000 of depreciation.