On January 7, 2021, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 $597,200 $716,640 $119,440 Property 2 $1,015,240 $776,360 ($238,880) Net built-in loss ($119,440) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $656,920. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2021. Martin's basis is Property 1 is a basis of $ Martin's basis in Property 2 is a basis of $ b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $

On January 7, 2021, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 $597,200 $716,640 $119,440 Property 2 $1,015,240 $776,360 ($238,880) Net built-in loss ($119,440) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $656,920. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2021. Martin's basis is Property 1 is a basis of $ Martin's basis in Property 2 is a basis of $ b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 15CE

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On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 $471,800 $566,160 $94,360 Property 2 $802,060 $613,340 ($188,720) Net built-in loss ($94,360) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 45% shareholder when the property is worth $518,980. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022. Martin's basis is Property 1 is a Martin's basis in Property 2 is a basis of $ basis of $ b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $
On January 7, 2021, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder’s basis, the fair market value, and the built-in gain (loss) of each property are: Martin Corporation Properties Property Shareholder's Basis Fair Market Value Built-in Gain (Loss) Property 1 $300,000 $375,000 $75,000 Property 2 $525,000 $400,000 ($125,000) Net Built-In Loss: ($50,000) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $350,000. Compute Martin’s basis in Property 1 and in Property 2 as of January 7, 2021. Compute Martin’s realized and recognized loss on the liquidating distribution of Property 2.
Lake Life, Inc., a C corporation, owns a single asset with a basis of $250,000 and a fair market value of $500,000. Lake Life elects S corporation status. Lake Life holds a positive E & P balance. The entity elects S corporation status for 2019 and then sells the asset. What are the corporate-level built-in gains taxes that must be paid by Lake Life? Answer: $____________
8. LO.1 On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The share- holder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Basis Fair Market Value Property 1 Property 2 $300,000 525,000 Net built-in loss $375,000 400,000 Built-In Gain (Loss) $ 75,000 (125,000) ($ 50,000) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $350,000. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022. b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2.
Exercise 20-18 (Algorithmic) (LO. 1) On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Property 1 Property 2 Net built-in loss Shareholder's Fair Market Built in Gain Basis Value or (Loss) $439,440 $476,060 $366,200 $622,540 $73,240 ($146,480) ($73,240) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 20% shareholder when the property is worth $402,820. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022. 125,000 x. Martin's basis is Property 1 is a carryover Martin's basis in Property 2 is a stepped-down ✔ basis of $ ✔basis of $ 3,233,223 X. b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. 2,324,232 X. 23,324 X and a recognized loss of $ Martin has a realized loss of $
Matulis, Inc., a C corporation, owns a single asset with a basis of $353,600 and a fair market value of $848,640. Matulis elects S corporation status. Matulis holds a positive E & P balance. The entity elects S corporation status for 2022 and then sells the asset. Compute the corporate-level built-in gains tax that must be paid by Matulis. If required, round your answer to the nearest dollar.
Exercise 20-15 (LO. 1) On January 4, 2018, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Property 1 Property 2 Net built-in loss Shareholder's Fair Market Built in Gain Basis Value or (Loss) $300,000 $75,000 $525,000 ($125,000) ($50,000) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $350,000. a. Compute Martin's basis in Property 1 and in Property 2 as of January 4, 2018. Martin's basis is Property 1 is a carryover ✔ basis of $ Martin's basis in Property 2 is a stepped-down ✓✔ basis of $ Feedback $375,000 $400,000 b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has realized loss of $ and a recognized loss of $ ▼ Check My Work When property is transferred to a…
A corporation sells property (basis of $750,000) to its sole shareholder for $450,000, the fair market value of the property. With respect to the sale: MPC Corporation makes a property distribution on 12/31/16 to its sole shareholder, Jon. The property distributed is a house (fair market value of $400,000; basis of $300,000) that is subject to a $150,000 mortgage that Jon assumes. Before considering the consequences of the distribution, MPC’s current E & P before the distribution is $175,000 and its accumulated E & P is $100,000. MPC makes no other distributions during the current year. What is MPCs taxable gain on the distribution of the house? What is MPC’s current E&P after the distribution on 12/31/16? What is Jon’s taxable gain (if any) and what type of gain is it? What is Jon’s basis in the house?
Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders. The property was subject to a $230,000 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? What is the shareholder’s basis in the property received? For the shareholder: What is the amount of the distribution? What is the basis of the property in the shareholder's hands? For the corporation: Is a gain or loss recognized as a result of the distribution? What is the effect of the distribution on E & P?
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 amount of built in gain is subject to S corporation tax at the date of sale?
Exercise 6-33 (Algorithmic) (LO. 4) On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 Property 2 $551,000 $936,700 $661,200 $110,200 $716,300 Net built-in loss ($220,400) ($110,200) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 25% shareholder when the property is worth $606,100. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022. Martin's basis is Property 1 is a carryover Martin's basis in Property 2 is a stepped-down basis of $ 551,000 basis of $ 826,500 b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $ 110,200 ✔.
Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted bases: FMV Adjusted Basis Inventory $ 15,750 $ 9,500 Building 71,500 54,750 Land 195,000 72,500 Total $ 282,250 $ 136,750 The fair market value of the corporation’s stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ramon. b. What amount of gain or loss does Ramon recognize on the transfer of the property to his corporation? c. What is Ramon’s basis in the stock he receives in his corporation?