Chapter c 6 liquidating distributions
C) The liquidating corporation does not recognize gains and losses when making a distribution of nonmoney property.D) All of the above are false.25) Identify which of the following statements is true. D) $200,000 of ordinary income.27) Identify which of the following statements is true.
Distributions received by the shareholder are treated as payment in full for the exchange of stock.A)Basis Recognized Gain/Loss$300,000$110,000 loss B)Basis Recognized Gain/Loss$250,000$110,000 loss C)Basis Recognized Gain/Loss$300,000$-0-D)Basis Recognized Gain/Loss$250,000$-0-29) Barnett Corporation owns an office building that cost $900,000. Barnett Corporation is liquidated and the office building is distributed to a single individual shareholder who assumes the mortgage. D) none of the above30) Identify which of the following statements is true.Barnett has taken $600,000 of depreciation on the building. Barnett Corporation must recognize A) no gain or loss. A) A liquidating distribution of property other than a disqualified property that is made ratably to all shareholders (based on their stockholdings) will permit the recognition of loss on the portion of the distribution that is made to a related person.Basis is not affected by the shareholder’s assuming corporate liabilities or receiving corporate property that is subject to a liability (Sec.A distribution in partial liquidation of the S corporation will also qualify for sale or exchange treatment under Sec.302 if the distribution is pursuant to a plan and occurs within the tax year the plan is adopted or the following tax year and the “safe harbor” of Sec.The general rule is that a shareholder’s stock basis is determined as of the end of the S corporation’s tax year.
If the shareholder has different bases in different blocks of stock, the computation of gain or loss depends on whether there is a single distribution or a series of liquidating distributions (Rev.
A) A loss recognized by a shareholder upon complete liquidation of a corporation may not qualify for ordinary loss treatment if the stock is Sec. B) The loss that is recognized by an individual shareholder on the liquidation of a corporation is a capital loss, up to certain limits, if the stock is Sec. C) The loss recognized by a corporate shareholder on the worthlessness of the controlled subsidiary’s stock is an ordinary loss. A) With limited exceptions, a loss can be recognized by a liquidating corporation when it makes a liquidating distribution of property that has declined in value.
D) All of the above are false.26) Under a plan of complete liquidation, Coast Corporation distributes land with a $300,000 adjusted basis and a $400,000 FMV to William, a 25% shareholder. The land is inventory in the hands of Coast Corporation. B) When computing the corporate-level gain on a liquidating distribution, the FMV of the property cannot exceed the liability assumed or acquired by the shareholder.
receives $45,000 in 2007 and an additional $135,000 in 2008, each distribution is allocated ratably between the blocks based on the number of shares in each block.
(a) Unless otherwise provided in a limited liability company agreement, a manager who has not wrongfully dissolved a limited liability company or, if none, the members or a person approved by the members, in either case, by members who own more than 50 percent of the then current percentage or other interest in the profits of the limited liability company owned by all of the members, may wind up the limited liability company's affairs; but the Court of Chancery, upon cause shown, may wind up the limited liability company's affairs upon application of any member or manager, or the member's personal representative or assignee, and in connection therewith, may appoint a liquidating trustee.
The shareholder recognizes gain when the adjusted basis of each block has been recovered, while loss is not recognized until the corporation has made its final distribution.