Question

Fir Corporation distributes all of its property in a complete liquidation. Debbie, a shareholder, receives $8,000...

Fir Corporation distributes all of its property in a complete liquidation. Debbie, a shareholder, receives $8,000 cash and securities having a fair market value of $32,000. The securities had been acquired three years ago by Fir as an investment for $24,000. Debbie has a $38,000 basis in her Fir stock. What is Debbie's basis in the securities received in the liquidation of Fir?

Homework Answers

Answer #1

Given :-
Value Of Assets Received by Debbie instead of Shares
Cash $8000
Investment $32000 {market value}
Fir Limited Alloted the shares on the basis of pro rata basis
Where the shareholders get Assets based on there amount of Shares held by shareholders
Since Debbie received Total value of assests worth of 40000
The actual shares held by Debbie is
Worth 24000 investment value of cash 3years ago can be calculated by cost of index
That is 8000*254/272 =7500
Total value of Shares held is
24000+7500 = 31500
Therefore the Debbie held shares worth $31500 and he got a compensation of $40000 from Fir Limited

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
As part of a complete liquidation, W Corp. distributes to its individual shareholder, Ellen, land held...
As part of a complete liquidation, W Corp. distributes to its individual shareholder, Ellen, land held as an investment with a basis of $200,000 and fair market value of $300,000. How much, if any gain is recognized by W Corp? Would your answer change if the property was subject to a $350,000 mortgage, i.e. liability? Please explain.
Which of these statements are true? please provide reasoning and irc citations 7A corporation distributes property...
Which of these statements are true? please provide reasoning and irc citations 7A corporation distributes property (fair market value of $20,000; basis of $13,000) to a shareholder m a qualifying stock redemption. The shareholder will have a basis in the property equal to the corporation's basis in the properly, or $13,000. 8In applying the stock attribution rules to a stock redemption, a shareholder is treated as owning the stock of her siblings (i.e., sisters and brothers). 9In applying the stock...
During the current year, Stigma Corporation distributes the assets listed below to its sole shareholder,Jessica. Assume...
During the current year, Stigma Corporation distributes the assets listed below to its sole shareholder,Jessica. Assume that Stigma has an E&P balance exceeding the amount distributed and is subject to a 34% marginal tax rate. Unless stated otherwise, adjusted bases for taxable income and E&P purposes are the same. Requirement For each asset listed, determine the gross income recognized by Jessica,her basis in the asset, the amount of gain or loss recognized by Stigma,and the effect of the distribution on...
Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $90,000. In addition,...
Trail Corporation has gross profits on sales of $140,000 and deductible expenses of $90,000. In addition, Trail has a net capital loss of $30,000. Trail's taxable income is $50,000 $20,000 $140,000 $60,000 Burt and Tiffany form Owl Corporation. Burt transfers property (basis of $20,000 and fair market value of $130,000), while Tiffany agrees to serve as Owl’s manager for one year. Each receives 100 shares of Owl Corporation stock. The value of Tiffany’s services for one year is $130,000. Which...
2 . Identify which of the following statements is true: If an S Corporation has no...
2 . Identify which of the following statements is true: If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock        If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur.        C Corporation operating losses are deductible by the individual shareholders        S Corporation operating losses are never deductible by the individual...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange...
During the current year, Marlene, Nancy and Olive formed a new S Corporation. Solely in exchange for stock, Marlene and Nancy contributed appreciated property, while Olive contributed services. The exchanges of Marlene and Nancy will be nontaxable if: Olive receives 30% of the stock Olive receives 80% of the stock Olive receives 15% of the stock Marlene and Nancy together receive 50% of the stock In June of 2018, Alice acquired her only machine for $30,000 to use in her...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In September of this year, when the home had a fair market value of $620,000 and he owed $550,000 on the mortgage, he took out a home equity loan for $80,000. Will used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home equity interest? a. $70,000. b. $80,000. c....
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary rivals? How will the acquisition of Reebok by Adidas impact the structure of the athletic shoe industry? Is this likely to be favorable or unfavorable for New Balance? 2- What issues does New Balance management need to address? 3-What recommendations would you make to New Balance Management? What does New Balance need to do to continue to be successful? Should management continue to invest...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT