Question 1

The gains shareholders recognize as a part of a corporate reorganization may be treated a dividend to the extent of the corporation's E & P.

Accepted Answer

A) True 
 B)False

Question 2

All of the following statements are true about corporate reorganization except:

Accepted Answer

A) Taxable amounts for shareholders are classified as a dividend or capital gain. 
B) Reorganizations receive treatment similar to corporate formations under § 351. 
C) The transfers of stock to and from shareholders qualify for like-kind exchange treatment. 
D) The value of the stock received by the shareholder less the gain not recognized (postponed) will equal the shareholder's basis in the stock received. 
E) All of the above statements are true.

Question 3

Target shareholders recognize gain or loss when they receive assets (boot) as well as stock in the acquiring corporation in a transaction meeting the § 368 requirements.

Accepted Answer

A) True 
 B)False

Question 4

The stock of Tan Corporation (E & P of $1.5 million) is owned as follows: 90% by Egret Corporation (basis of $900,000),and 10% by Zoe (basis of $70,000).Both shareholders acquired their shares in Tan more than six years ago.In the current year,Tan Corporation liquidates and distributes land (fair market value of $1.1 million,basis of $1.3 million) and equipment (fair market value of $700,000,basis of $410,000) to Egret Corporation,and securities (fair market value of $200,000,basis of $260,000) to Zoe.What are the tax consequences of these distributions to Egret,to Tan,and to Zoe?

Accepted Answer

The answer of The stock of Tan Corporation (E &...

Question 5

The basis for the acquiring corporation in the target's assets is increased by any gain recognized by the target.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the role of letter rulings in corporate reorganizations.

Accepted Answer

The answer of Discuss the role of letter rulings in...

Question 7

Pursuant to a liquidation,Coral Corporation distributes to Lucinda,a shareholder,land (basis of $90,000,fair market value of $200,000).The land is subject to a $75,000 liability.Lucinda will have a basis of $125,000 in the land.

Accepted Answer

A) True 
 B)False

Question 8

The stock in Toucan Corporation is held equally by two brothers.Four years ago,the shareholders transfer 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?

Accepted Answer

A) $0 
B) $20,000 
C) $160,000 
D) $180,000 
E) None of the above

Question 9

Pursuant to a complete liquidation,Lilac Corporation distributes the following assets to its unrelated shareholders: land held for three years as an investment (basis of $300,000,fair market value of $600,000),inventory (basis of $100,000,fair market value of $80,000),and marketable securities held for four years as an investment (basis of $200,000,fair market value of $240,000).What are the tax consequences to Lilac Corporation as a result of the liquidation?

Accepted Answer

A) Lilac Corporation would recognize no gain or loss on the liquidation. 
B) Lilac Corporation would recognize a net capital gain of $320,000. 
C) Lilac Corporation would recognize a net capital gain of $340,000 and an ordinary loss of $20,000. 
D) Lilac Corporation would recognize a net capital gain of $340,000. 
E) None of the above.

Question 10

Which of the following statements is correct with respect to the § 338 election?

Accepted Answer

A) The subsidiary corporation makes the § 338 election. 
B) A qualified stock purchase occurs when a corporation acquires, in a taxable transaction, at least 80% of the stock (voting power and value) of another corporation within an18-month period. 
C) The parent recognizes no gain (loss) as a result of the election. 
D) Gain, but not loss, is recognized by the subsidiary as a result of a deemed sale of its assets. 
E) None of the above.

Question 11

Obtaining a positive letter ruling from the IRS can ensure the desired tax treatment for parties contemplating a corporate reorganization.

Accepted Answer

A) True 
 B)False

Question 12

On March 15,2016,Blue Corporation purchased 10% of the Gold Corporation stock outstanding.Blue Corporation purchased an additional 40% of the stock in Gold on October 24,2016,and an additional 25% on April 4,2017.On July 25,2017,Blue Corporation purchased the remaining 25% of Gold Corporation stock outstanding.
a.For purposes of the § 338 election, on what date does a qualified stock purchase occur?
b.What is the due date for making the § 338 election?

Accepted Answer

The answer of On March 15,2016,Blue Corporation purchased 10% of...

Exam 20: Corporations: Distributions in Complete Liquidation and an Overview of Reorganization

The gains shareholders recognize as a part of a corporate reorganization may be treated a dividend to the extent of the corporation's E & P.

All of the following statements are true about corporate reorganization except:

Target shareholders recognize gain or loss when they receive assets (boot) as well as stock in the acquiring corporation in a transaction meeting the § 368 requirements.

The basis for the acquiring corporation in the target's assets is increased by any gain recognized by the target.

Discuss the role of letter rulings in corporate reorganizations.

Pursuant to a liquidation,Coral Corporation distributes to Lucinda,a shareholder,land (basis of $90,000,fair market value of $200,000).The land is subject to a $75,000 liability.Lucinda will have a basis of $125,000 in the land.

Which of the following statements is correct with respect to the § 338 election?

Obtaining a positive letter ruling from the IRS can ensure the desired tax treatment for parties contemplating a corporate reorganization.