Taxat icure whether statement is trve (A) or false (8 tion in a deals with the t

Question

Taxat icure whether statement is trve (A) or false (8 tion in a deals with the transfer of assets by the target corpora 1. A Type A reorganization bution as part of a corporate reorsanization 2. Shareholders who receive only stock as a distri may still treat the amount received as capital gains. ration for stock in Imagination Corporation 000). The exchange 3. Mario exchanges stock he owns in Magic Corpo plus a note payable having a fair market value of $100,000 (principle amount of S85 Corporation four years ago. The Imagination stock is worth $500,000. Mario will recognize gain on the transaction in the amount of $85,000. ax free reorganization of both corporations. Mario paid $220,000 for stock in Magic 4. The stock in Yellow Corporation is held equally by two sisters. One year before Yellow liquidates, the shareholders transfer building (basis of $150,000, fair market value of 100,000) to Yellow corporation in return for stock. In a current year liquidation, Yellow Corporation transfers the building now worth only $87,000 pro rata to the sisters. The amount of loss that Yellow can recognize is $63,000) 5.Partners must generally treat the value of profits interests they receive in exchange for 6. An additional allocation of partnership debt or relief of partnership debt is considered to be a 7. Partnerships can use special allocations to shift built-in gains and built-in losses on 8. Jason is a 25% partner in the JJM Partnership when he sells his entire interest to Lavelle for services as ordinary income. deemed cash contribution or cash distribution. contributed property from a partner who contributed the property to other partners. $76,000. At the time of the sale, Jason's basis in JJM is $87,000. UM does not have any debt or hot assets. Jason will recognize a gain of $11,000 on the sale o 9. LZV Partnership distributed in a proportionate nonliquidating distribution to Heather $30000 in cash and land, FMV of $80,000 and adjusted basis to LZV of $60,000. Heather's basis in her partnership was $45,000 immediately before the distribution. As the result of the distribution, Heather recognizes no gain, her basis in the partnership interest is reduced to $0 and her basis in the land is now $15,000. 10.S corporations offer the same legal protection to owners as C corporations.

Explanation / Answer

1. (TRUE)Type A Reorganisation for a merger and consolidation allows the buyer to buy assets of the target company, hence the target is required to transfer all or part of the assets to the buyer. Hence it is True.

2. (False). In a reorganisation, the shares which are distributed to the shareholders, the value is adjusted with the existing value of the shares, hence the evalue of shares received is reduced in the existing shares value, hence it does not come under capital gain tax.

3. (False) Mario had invested 220000 four years ago, now he exchanged it for 500000, so he already booked a profit of 500000 - 220000.

4. (TRUE) Because, the value decreased and settled with the sisters at a loss of $63000.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.