Julia owns 40 percent of Longleaf Corp. and has a basis in h…
Julia owns 40 percent of Longleaf Corp. and has a basis in her stock of $100,000. After adopting a plan of liquidation, Longleaf makes a liquidating distribution to Julia and the other shareholders. Julia receives cash of $30,000, Pine Inc. stock with a $30,000 fair value, and equipment with a fair value of $125,000. She takes the equipment subject to a $20,000 liability. Longleaf’s basis in the stock distributed to Julia is $52,500. Longleaf’s original cost for the equipment was $80,000, but it has since claimed $30,000 of depreciation deductions (i.e., the equipment has an adjusted basis of $50,000). Both the stock and the equipment are capital assets and have been held for several years. [question 2 of 2] How much gain does Julia recognize on the liquidating distribution, and what is her basis in the distributed stock and equipment?
Read DetailsNote: use the following fact pattern for the next four quest…
Note: use the following fact pattern for the next four questions. Lisa and Richard wish to acquire Acacia Corp., a C corporation. As part of their discussions with Tobias, the sole shareholder of Acacia, they examined the business’ tax accounting balance sheet. The relevant information is summarized as follows: Fair value Adjusted basis Assets: Cash $30,000 $30,000 Equipment $70,000 $10,000 Building1 $260,000 $140,000 Land1 $410,000 $180,000 Total $770,000 $360,000 Liabilities: Payables $20,000 $20,000 Mortgage1 $150,000 $150,000 Total $170,000 $170,000 1 Mortgage is attached to the building and the land. Tobias’ basis in the Acacia stock is $400,000. Lisa and Richard offer to pay Tobias $900,000 for his company. [question 1 of 4] How much gain or loss must Acacia recognize if the transaction is structured as a stock sale to Lisa and Richard?
Read Details