Question 1

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 2

On March 16, 2011, Blue Corporation purchased 10% of the Gold Corporation stock outstanding.Blue Corporation purchased an additional 40% of the stock in Gold on October 24, 2011, and an additional 25% on April 4, 2012.On July 23, 2012, Blue Corporation purchased the remaining 25% of Gold Corporation stock outstanding.

Accepted Answer

The answer of On March 16, 2011, Blue Corporation purchased...

Question 3

There are several different types of corporate reorganizations allowed by the Internal Revenue Code.Provide a brief description of each type.

Accepted Answer

The Code states, in ...

Question 4

If a liquidation qualifies under § 332, any minority shareholder will recognize gain or loss equal to the difference between the fair market value of assets received and the basis of the shareholder's stock.

Accepted Answer

A) True 
 B)False

Question 5

For a corporate restructuring to qualify as a tax-free reorganization, the transaction must have a sound business purpose.

Accepted Answer

A) True 
 B)False

Question 6

The stock of Cardinal Corporation is held as follows: 90% by Blue Jay Corporation (basis of $500,000)  and 10% by Samuel (basis of $70,000) .Cardinal Corporation is liquidated in October of the current year, pursuant to a plan adopted earlier in the year.Pursuant to the liquidation, Cardinal Corporation distributed Asset A (basis of $450,000, fair market value of $720,000)  to Blue Jay, and Asset B (basis of $45,000, fair market value of $80,000)  to Samuel.No election is made under § 338.With respect to the liquidation of Cardinal:

Accepted Answer

A)  Cardinal Corporation recognizes a gain of $35,000.
B)  Blue Jay has a basis in Asset A of $720,000.
C)  Samuel recognizes no gain (or loss) .
D)  Blue Jay recognizes a gain of $220,000.
E)  None of the above.F) B) and D)
G) C) and E)

Question 7

As a general rule, a liquidating corporation recognizes gains but not losses on the distribution of property in complete liquidation.

Accepted Answer

A) True 
 B)False

Question 8

Section 332 does not apply to a parent-subsidiary liquidation if the subsidiary corporation is insolvent on the date of the liquidation.

Accepted Answer

A) True 
 B)False

Question 9

The related-party loss limitation in a complete liquidation can apply to a distribution or sale of property while the built-in loss limitation applies only to distributions of property.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true?

Accepted Answer

A)  The dollar amounts involved in reorganizations are generally substantial; thus, it is important that the financial and tax treatment of the reorganization is consistent.
B)  A letter ruling indicates the income tax treatment the IRS will apply to the proposed corporate restructuring transaction.
C)  Careful planning can ensure that all gains recognized by individual shareholders receive beneficial dividend treatment.
D)  Corporations prefer to recognize capital gains on reorganizations because they can offset the capital losses they may have.
E)  None of the statements is true.F) B) and D)
G) B) and E)

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

If a liquidation qualifies under § 332, any minority shareholder will recognize gain or loss equal to the difference between the fair market value of assets received and the basis of the shareholder's stock.

Correct Answer
verified

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

Correct Answer
verified

As a general rule, a liquidating corporation recognizes gains but not losses on the distribution of property in complete liquidation.

Correct Answer
verified

The related-party loss limitation in a complete liquidation can apply to a distribution or sale of property while the built-in loss limitation applies only to distributions of property.

Correct Answer
verified

Section 332 does not apply to a parent-subsidiary liquidation if the subsidiary corporation is insolvent on the date of the liquidation.

Correct Answer
verified

For a corporate restructuring to qualify as a tax-free reorganization, the transaction must have a sound business purpose.

Correct Answer
verified

Correct Answer
verified

There are several different types of corporate reorganizations allowed by the Internal Revenue Code.Provide a brief description of each type.

Correct Answer
verified
The Code states, in ...
View Answer

Which of the following statements is true?

Correct Answer
verified

Correct Answer
verified

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

If a liquidation qualifies under § 332, any minority shareholder will recognize gain or loss equal to the difference between the fair market value of assets received and the basis of the shareholder's stock.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As a general rule, a liquidating corporation recognizes gains but not losses on the distribution of property in complete liquidation.

Correct AnswerverifiedShow Answer

The related-party loss limitation in a complete liquidation can apply to a distribution or sale of property while the built-in loss limitation applies only to distributions of property.

Correct AnswerverifiedShow Answer

Section 332 does not apply to a parent-subsidiary liquidation if the subsidiary corporation is insolvent on the date of the liquidation.

Correct AnswerverifiedShow Answer

For a corporate restructuring to qualify as a tax-free reorganization, the transaction must have a sound business purpose.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

There are several different types of corporate reorganizations allowed by the Internal Revenue Code.Provide a brief description of each type.

Correct AnswerverifiedThe Code states, in ...View AnswerShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The Code states, in ...
View Answer

Correct Answer
verified

Correct Answer
verified