Whaler Corporation makes a liquidating distribution of land with a $70,000 adjusted basis and a $100,000 FMV to shareholder Horton, who surrenders his Whaler stock (adjusted basis $60,000) to the corporation. Alice, another shareholder, receives $100,000 cash for her shares ($115,000 adjusted basis). a.What are the tax consequences to Whaler Corporation?b.What are the tax consequences to both Horton and Alice?c.What is Horton's basis in the land?
What will be an ideal response?
| a. | Whaler Corporation recognizes a $30,000 gain on the land distributed in liquidation. |
| b. | Horton recognizes a $40,000 ($100,000 FMV - $60,000 adjusted basis) capital gain while Alice |
| c. | Horton's basis in the land is $100,000. |
You might also like to view...
A model that allows variables to change over time is referred to as a
A. static model. B. dynamic model. C. partial-equilibrium model. D. general-equilibrium model.
With regard to the seller's delivery of nonconforming goods to the buyer, what is meant by the seller's right to "cure?"
What will be an ideal response?
If a court determines that a manager's corporate decision amounted to self-dealing,
A. the business judgment rule will not apply. B. the transaction being challenged will be automatically voided. C. the manager is automatically personally liable to the corporation. D. the manager will automatically be fired.
The pro rata rule states that any increase in price paid for shares tendered must be offered to all shareholders, even those who have previously tendered their shares
Indicate whether the statement is true or false