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Andies Inc. owns all of the stock of Theatre Corp., the only asset of which is...

Andies Inc. owns all of the stock of Theatre Corp., the only asset of which is acreage that had been used as one of the last surviving drive-in theatres, with an adjusted basis of $60,000 and FMV of $150,000. Andies’ basis in the Theatre stock is $50,000. Yancy Corp wants to obtain the land so Theatre exchanges the land for Yancy voting stock work $130,000 and then liquidates. The voting stock had been treasury stock that Yancy had bought in the market for $100,000. Yancy also transfers $1,000 cash in addition to the voting stock. How much gain will Theatre Corp. recognize from this exchange? Explain your response.

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Answer #1

Andies inc owns all of the stock of theatre corporation.

No exchange of stock does not quality undersection on 1000 is applicable on like kind exchange of real property for productive use in business for investment.

if yancy offers to exchange publicity traded bonds for theatre stock. A should accept offer he can bond for investment under section 100 and deferred tax.

Yancy is willing to pay 130,000 worth of stock in exchange of drive in theatres adjusted basis 60,000 and A's basis in theatre stock worth 50,000

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