1. A Corporation has three series of common stock issued and outstanding:

• 100 shares of Series A (4 votes per share);
• 100 shares of Series B (3 votes per share); and
• 100 shares of Series C (nonvoting).

Bob owns all of Series A and all of Series B. How many shares of Series C stock, if any, does Bob need to own in order to be in "control" of the corporation within the meaning of 351(a) and 368(c)? Explain.

(2) Sandy Inc. had a book (GAAP) income of $140,000 for the current tax year. Sandy's records reflected the following current-year information as to the components of that book income:

• Sandy Inc. had accrued and received municipal bond interest of $10,000.
• Sandy Inc. had received a dividend of $80,000 from ABC Corp; Sady owns 15% of the stock of ABC.
• The nondeductible portion of Sandy's business meals expense for the current year was $8,000.

3) T Corp is an accrual-basis, calendar-year Ccorporation with 100,000 shares of voting common stock issued and outstanding as of December 30, Year 1. On December 31, Year1, Hall surrendered 2,000 shares of T stock to T in exchange for $33,000 cash. Hall hadnodirect or indirect interest in T after the stock surrender. Additional information follows:

Hall's adjusted basis in 2,000shares of T on December31, Year1 ($8per share)	$16,000
T's accumulated earnings and profits at January1, Year1	25,000
T's Year 1 net operating loss	(7,000)

What is the (i) amount and (ii) character of income, if any, that Hall must recog-nize on these facts? Explain.

4. B Corp. is an accrual-basis, calendar-year Ccorporation with a single indivi-dual shareholder, Ms. B. At year end, B Corp. had $600,000 accumulated and current E&P as it prepared to make its only dividend distribution for the year to Ms. B. B Corp. could distribute either (i) cash of $200,000 or (ii) land with an ad-justed tax basis of $75,000 and a fair market value of $200,000.

(a) As B Corp.'s CPA, do you recommend that it distribute the cash or the land, and why? Explain.

(b) What would the comparative results be to Ms. B in receiving the cash vs. the land? Explain.

5. As part of a complete liquidation, C Corp. (a Ccorporation) distributed the following assets to unrelated individual shareholders:

	Basis		FMV
Investment land	$500,000		$540,000
Inventory	130,000		150,000
Marketable securities	70,000		20,000

What is the amount of C Corp.'s recognized net capital gain or loss, if any, as a result of these liquidating distributions? Explain.

Answer rating: 100% (QA)

1 Control of the Corporation a Compute the absolute democratic pressure of Sways portions Series A o... View the full answer