Greg, a cash method of accounting taxpayer, owns 100 shares of Parker Corporation stock with a basis of $20,000. Greg receives two liquidating distributions of $8,000 on March 3 of last year, and $8,000 on August 8 of this year. The amount of the second distribution is not known until June 15 of this year. Greg recognizes __________.
A) a gain of $8,000 last year and a loss of $12,000 this year.
B) a loss of $2,000 last year and a loss of $2,000 this year.
C) no loss last year and a $4,000 loss this year.
D) none of the above
C) no loss last year and a $4,000 loss this year.
The shareholder basis is recovered first and the recognition of gain occurs only after the basis has been recovered in a series of partially liquidating distributions. No loss is generally recognized until the final liquidating distribution has been received.
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Salaries Payable would be recorded in the amount of
a. $8,200 b. $6,830 c. $8,630 d. $7,450
The federal government agency with the ultimate authority to determine the rules in preparing statements for companies whose stock is sold to the public is the __________________________________________________
Fill in the blank(s) with correct word
Which of the following is NOT a change in accounting principle?
a. A change from FIFO to LIFO for inventory valuation b. A change from eight years to five years in the useful life of a depreciable asset c. A change from completed-contracts to percentage-of-completion d. A change from double-declining-balance to straight-line depreciation
On March 1,Eugene retains Farley to act as his authorized agent. On April 1, Eugene dies. On April 2, before Farley knows of Eugene's death, he enters into a contract on Eugene's be¬half. The con¬tract is
a. binding on Eugene's heirs. b. binding on Farley. c. void. d. voidable.