6. The stock in Black Corporation is owned by Joseph and Elizabeth, who are unrelated. Joseph owns 80% and Elizabeth owns 20% of the stock in Black Corporation. The following assets are to be distributed in complete liquidation of Black Corporation: Cash Inventory Equipment Adjusted Basis Fair Market Value $300,000 $300,000 75,000 100,000 200,000 100,000 a. What gain or loss would Black Corporation recognize if it distributes the cash and equipment to Joseph and the inventory to Elizabeth? b. What gain or loss would Black Corporation recognize if it distributes the cash and inventory to Joseph and the equipment to Elizabeth?
6. The stock in Black Corporation is owned by Joseph and Elizabeth, who are unrelated. Joseph owns 80% and Elizabeth owns 20% of the stock in Black Corporation. The following assets are to be distributed in complete liquidation of Black Corporation: Cash Inventory Equipment Adjusted Basis Fair Market Value $300,000 $300,000 75,000 100,000 200,000 100,000 a. What gain or loss would Black Corporation recognize if it distributes the cash and equipment to Joseph and the inventory to Elizabeth? b. What gain or loss would Black Corporation recognize if it distributes the cash and inventory to Joseph and the equipment to Elizabeth?
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 62P
Related questions
Question
Transcribed Image Text:6.
The stock in Black Corporation is owned by Joseph and Elizabeth, who are unrelated. Joseph owns 80%
and Elizabeth owns 20% of the stock in Black Corporation. The following assets are to be distributed in
complete liquidation of Black Corporation:
Cash
Inventory
Equipment
Adjusted
Basis
Fair Market
Value
$300,000
$300,000
75,000
100,000
200,000
100,000
a.
What gain or loss would Black Corporation recognize if it distributes the cash and equipment
to Joseph and the inventory to Elizabeth?
b. What gain or loss would Black Corporation recognize if it distributes the cash and inventory to
Joseph and the equipment to Elizabeth?
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