Question

8:12 < Chapter 20 Homework Assignment Q 1. Dove Corporation (E & Pof S800,000) has 1,000 shares of stock outstanding. The shares are owned as follows: Julia, 600 shares; Maxine (Julia's sister), 300 shares; and Janine (Julia's daughter), 100 shares. Dove Corporation owns land (basis of S300,000, fair market value of $260,000) that it purchased as an investment seven years ago. Dove distributes the land to Julia in exchange for all of her shares in the corporation. Julia had a basis of $275,000 in the shares. What are the tax consequences for Corporation and Julia if the distribution is: both Dove a. A qualifying stock redemption? b. A liquidating distribution? 2. Last year, a shareholder transferred land (basis of $650,000, fair market value of S575,000) to Roadrunner Corporation in a $351 transaction. This was the only property transferred to Roadrunner at that time. During the cument year, Roadrunner Corporation adopted a plan of liquidation and distributed the land to Rhonda, a 15% shareholder. On the date of the distribution, the land had a fair market value of $400,000. Roadrunner Corporation never used the land for business purposes during the time it owned the property What amount of loss may Roadrunner recognize on the distribution of the land? 3. Last year, Pink Corporation acquired land and securities in a S 351 tax-free exchange. On the date of the transfer, the land had a basis of $720,000 and a fair market value of S1 million, and the securities had a basis of $110,000 and a fair market value of $250,000. Pink Corporation has two shareholders, Maria and Paul, who are unrelated. Maria owns 85% of the stock in the corporation, 15%. Pink adopts a plan of liquidation in the current year. On this date, the value of the land has decreased to S500,000. What is the effect of each of the following on and Paul owns a. Distribute all the land to Maria. b. Distribute all the land to Paul. c. Distribute 85% of the land to Maria and 15% to Paul d. Distribute 50% of the land to Maria and 50% to Paul. e. Sell the land and distribute the proceeds of S500,000 proportionally to Maria and to Paul Dashboard Calendar To Do nbox

Answer 1

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