Question: IRC 302(b)(2) states that redemption will be treated as an exchange if the redemption is a disproportionate distribution The determination of whether a redemption qualifies

IRC 302(b)(2) states that redemption will be treated as an exchange if the redemption is “a disproportionate distribution” The determination of whether a redemption qualifies under this provision is:

a. very subjective.

b. very objective.

Stone Corp. purchased 100% of the stock of Pearl Corp. in 1984 for $300,000. Early this year, Pearl was liquidated. Stone Corp. received all of Pearl’s assets, which had a basis to Pearl Corp. of $420,000 and an FMV of $440,000. Assume the requirements of §332 were satisfied. Will Stone Corp. recognize any gain as a result of the liquidation?

a. yes.

b. no.

Refer to question #11 above. Will Pearl Corp. recognize any gain as a result of the liquidation?

a. yes.

b. no.

Refer to question #11 above.

The gain potential in the stock owned by Stone Corporation prior to the liquidation is:

a. deferred until a later time.

b. eliminated, i.e., will never be recognized.

Step by Step Solution

★★★★★

3.43 Rating (153 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Which of the following should be treated as an incremental cash flow when computing the NPV of an investment? a. A reduction in the sales of a companys other products caused by the investment. b. An...

A submarine can be treated as an ellipsoid with a diameter of 5 m and a length of 25 m. Determine the power required for this submarine to cruise horizontally and steadily at 40 km/h in seawater...

PACT principle 2 states that a good copytesting system should establish how results will be used in advance of each copy test. Explain the specific meaning and importance of this copytesting...

Stone Corp. purchased 100% of the stock of Pearl Corp. in 1984 for $100,000. Early this year, Pearl was liquidated. Stone Corp. received all of Pearls assets, which had a basis to Pearl Corp. of...

Stock redemption is generally treated as an exchange, in which the stockholders give up their stock in exchange for cash or property. However, the Internal Revenue Code (IRC) does provide...

1.The special tax treatment of corporate reorganization offers an opportunity to engage in tax free transaction with the common result there is permanent elimination investor gain or loss. Select...

1 Chris owns 70 percent of ABC Corporation. ABC Corporation had acquired land known as Parcel A in 1984 for $68,000 and held Parcel A for investment purposes. During the current taxable year, ABC...

please summarize the following article In March 2016, America's Governmental Accounting Standards Board (GASB) issued Government Accounting Standard (GAS) No. 82, entitled Pension IssuesAn Amendment...

Need help with 50 MCQs on 1040s. Need 70% to pass. Serious inquiries only. Thank you. Exam in Progress Exam DT1TG16 - 1040 Income Tax Preparation Questions 50 Passing Score 70% 1. Available filing...

Karrie is a golf pro, and after she paid taxes, her total income from golf and from the stocks and bonds that she owns was $1,000,000 in 2011. At the beginning of 2011, she owned $600,000 worth of...

According to a lawsuit filed by the EEOC, two female cashiers at Loves truck stop in Buckeye, Arizona, ages 18 and 20, were allegedly subjected to unwanted sexual touching and pressing, crude and...

WSAP Calinativ Out Our Berwing ther: Cremare 1 Cowe Question 1 Determine if each function is linear or not. Recall that linear equations have no products or roots of variables, and no variables...

As T.C. Resort Properties seeks to improve its customer service, the company faces new competition from SunLow Resorts. SunLow has recently opened resort hotels on the islands where T.C. Resort...

Madrid FC own land in the metropolitan area of Madrid. They would like to build a sports complex which would include state-of the art training facilities for elite athletes. Your consultancy office...

You will design two embedded systems with multiple inputs on one microcontroller and output via a single controller. That employs 12C communication, timer interrupts to sense the data at different...

John is a regional manager of a chain of stores that sell computer equipment and accessories, mainly based out of town in retail parks.A new manager has been appointed to one of the stores, which...

Matilda is downloading music and videos from an online site. She is currently buying three music downloads that cost $3 each and two video downloads that also cost $3 each. The table below indicates...

s 12-15 refer to the following information: You come from a long line of electric eel farmers. However, rather than following the family tradition, you decide to try your hand at fish farming. You...

Please, I need help with the calculations for the following 25 problems in the "final" tab of the workbook before 9pm CST. FINC 340 Quizzes 1 2 Derivatives can be strictly defined as Financial...

A federal government agency that is responsible for setting vehicle fuel economy standards for automobile manufacturers is conducting research in order to update its fuel economy standards for the...

can any expert help me to work on the questions below?? i need it done correctly as soon as possible FINC 340 Quizzes 1 2 Derivatives can be strictly defined as Financial intermediaries are extremely...

I have a taxation case related to the American law need to be solved. The case is below, also, i attachedyou an exampleof the case, need to follow it. We can talk about the payment.However, you need...

Please help with this question: Compute debt/equity and debt/ tangible net worth for 2015 and 2014. Is the change from 2014 to 2015 favorable or unfavorable? What do these ratios tell us about the...