FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
In the current year, Dove Corporation (E & P of $1,000,000) distributes all of its property in a complete liquidation. Alexandra, a shareholder, receives land having a fair market value of $185,000. Dove Corporation had purchased the land as an investment three years ago for $115,000, and the land was distributed subject to a $75,000 liability. Alexandra took the land subject to the $75,000 liability. What is her basis in the land?
a. $115,000
b. $185,000
c. $0
d. $110,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Global Corporation distributed property with an $543,000 fair market value and a $298,650 adjusted basis to one of its shareholders. The property was subject to a $164,258 mortgage, which the shareholder assumed. Global has ample E & P to cover any distribution made during the year. What is the amount of the shareholder's dividend income on the distribution? 378,742 What is the shareholder's basis in the property received?arrow_forwardRobin transferred her 60 percent interest to Cardinal Company as part of a complete liquidation of the company. In the exchange, she received land with a fair market value of $940,000. Robin's basis in the Cardinal stock was $980,000. The land had a basis to Cardinal Company of $1,160,000. What amount of loss does Cardinal recognize in the exchange and what is Robin's basis in the land she receives? The distribution was non-pro rata to Robin, a related person.arrow_forwardPeggy owns 100% of Delta Corporation's stock. She purchased her stock ten years ago, and her current basis for the stock is $215,000. On June 10, Peggy decided to liquidate Delta. Delta's balance sheet prior to the sale of the assets, payment of the liquidation expenses, and payment of federal income taxes, as well as some additional information is as follows: View the balance sheet. View the additional information. Read the requirements. Requirement a. What are the tax consequences of the liquidation to Peggy and Delta Corporation? Assume a 21% corporate tax rate. Let's begin by determining the tax consequences for Delta. Start by computing Delta's recognized gain or loss on each of the assets distributed to Peggy (and in total) as a result of the liquidation. (Complete all input fields. Enter a 0 in the "Recognized gain (loss)" column, and enter "N/A" in the "Character of gain or loss" column if no gain or loss is recognized by Delta.) Cash Assets Marketable securities Equipment Land…arrow_forward
- Dave and his friend Stewart each owns 50 percent of KBS. During the year, Dave received $96,000 compensation for services he performed for KBS during the year. He performed a significant amount of work for the entity, and he was heavily involved in management decisions for the entity (he was not a passive investor in KBS). After deducting Dave's compensation, KBS reported taxable income of $38,400. How much FICA and/or self-employment tax is Dave required to pay on his compensation and his share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability company (taxed as a partnership) (ignore the 0.9 percent additional Medicare tax)? How much FICA tax would the entity be required to pay on the compensation paid to Dave? Note: Do not round any percentage calculations. Round other intermediate calculations and final answers to the nearest whole dollar amount. C Corporation S Corporation Limited liability company FICA Tax that Dave pays FICA Tax that…arrow_forwardPat Middleton owns a non-depreciable capital asset that originally cost $20,000 and is now worth $80,000. Pat transfers the asset to a corporation, receiving as payment debt of $60,000 and preferred shares with a value of $20,000. Pat and the corporation will elect under Section 85 to avoid paying tax on the transfer. Determine the appropriate transfer price under Section 85. Determine the cost of the asset for the corporation, and the ACB and PUC for the preferred shares received as consideration.arrow_forwardhello please provide answerarrow_forward
- The stock in Toucan Corporation is held equally by two brothers. Four years ago, the shareholders transferred property (basis of $200,000, fair market value of $220,000) to Toucan Corporation as a contribution to capital. In the current year and pursuant to a complete liquidation of Toucan, the property is distributed proportionately to the brothers. At the time of the distribution, the property had a fair market value of $40,000. What amount of loss will Toucan Corporation recognize on the distribution of the property? Oa. $160,000 Ob. $0 Oc. $20,000 Od. $180,000arrow_forwardCharla Corporation is owned eighty percent (80%) by Jeanette and twenty percent (20%) by Victoria who are unrelated to each other. At the time of a Complete Liquidation, Charla Corporation owned Land that had a Fair Market Value of $100,000 and a basis to Charla Corporation of $400,000. The Land was acquired by Charla Corporation in a Section 351 Transfer two (2) years ago from Victoria when its Fair Market Value was $200,000. (Assume that there was no business purpose for the transfer). Pursuant to the Complete Liquidation, the Land is sold to an unrelated third party for $100,000 and the $100,000 proceeds of the sale are distributed proportionately (pro-rata) to Jeanette and Victoria (ie. eighty percent (80%) to Jeanette and twenty percent (20%) to Victoria). The Recognized Loss to Charla Corporation is: A. $500.00 B. $300.00 C $200.00 D. SOarrow_forwardThis year, Neil Incorporated exchanged a business asset for an investment asset. Both assets had a $932,000 appraised FMV. Neil’s book basis in the business asset was $604,600, and its tax basis was $573,000. Three years after the exchange, Neil sold the investment asset for $1,000,000 cash. Required: Compute Neil’s book gain and tax gain on sale assuming Neil acquired the investment asset in a taxable exchange. Compute Neil’s book gain and tax gain on sale assuming Neil acquired the investment asset in a nontaxable exchange.arrow_forward
- C Corporation converts to S Corporation when the fair market value of its assets was $100,000 and its basis of those assets was $60,000. Three years later, S Corporation sells those assets for $120,000. What is the total gain recognized when S Corporation sells those assets for $120,000?arrow_forwardAcme Corporation is liquidated with Joe, sole shareholder, receiving property having an adjusted basis of $70,000 and an FMV of $100,000. Joe's basis in the Acme stock surrendered is $60,000. Describe the tax consequences to Joe and Acme as a result of the liquidation. Please explain step by step so I can understand the concepts, not just an answer.arrow_forwardN Corporation has E&P of $400,000. It distributes land with a fair market value of $180,000 (adjusted basis of $125,000) to its sole shareholder, Rory. The land is subject to a liability of $155,000 that Rory assumes. Rory has what amount for a taxable dividend: A taxable dividend of $15,000 A taxable dividend of $25,000 A taxable dividend of $55,000 A taxable dividend of $180,000 A taxable dividend of $400,000 The distribution of land will not result in a taxable event for Roryarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education