On April 23, 2019, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E &
Question:
On April 23, 2019, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1,200,000. Amazon Corporation has assets with a fair market value of $1,400,000 (basis of $800,000), no liabilities, and no loss or tax credit carryovers. Auk Corporation files a timely § 338 election. Assume that both the aggregate deemed sale price (ADSP) and adjusted grossed-up basis (AGUB) are $1,306,329.
a. What are the tax consequences of the § 338 election to Amazon Corporation and to Auk Corporation?
b. Assume that Amazon Corporation is liquidated immediately following the § 338 election. What are the tax consequences of the liquidation to Amazon Corporation and to Auk Corporation?
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....
Step by Step Answer:
a Amazon Corporation subsidiary is deemed to have sold its assets on April 23 2019 qualified stock p...View the full answer
South Western Federal Taxation 2020 Corporations, Partnerships, Estates And Trusts
ISBN: 9780357109168
43rd Edition
Authors: William A. Raabe, James C. Young, William H. Hoffman, Annette Nellen, David M. Maloney
