J.S. Bachman owns 100% of Legato Corporation€™s stock and has a $350,000 basis in his stock. On December 31 of the current year, Legato Corporation reported the following balance sheet:

Staccato Corporation wishes to purchase, for cash, 80% of Legato€™s stock from Mr. Bachman and then make a Sec. 338 election. Determine the following amounts resulting from the transaction and Sec. 338 election: Grossed-up basis (G), aggregated deemed sale price (ADSP), total gain (loss) recognized, tax liability, adjusted grossed-up basis (AGUB), basis of each asset after allocating the AGUB, and gain recognized by Mr. Bachman. Assume a 34% corporate tax rate, and determine the required amounts in each of the following independent situations.
a. Staccato pays $491,200 for the Legato stock.
b. Staccato pays $600,000 for the Legato stock.
c. Staccato pays $470,000 for the Legato stock.
d. Staccato pays $670,000 for the Legato stock.

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Assets Adjusted BasisFMV Liabilities and Equity Amount Inventory $200,000 250,000 Total 5.000 250,000 Liabilities $100,000 Land 600000 Equity 750,000 S850,000 Total S850,000