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Federal Taxation

Business

Quiz 6 :

Corporate Liquidating Distributions

Quiz 6 :

Corporate Liquidating Distributions

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The adjusted basis of property received in a complete liquidation is its fair market value on the distribution date.
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True False
Answer:

Answer:

True

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Riverwalk Corporation is liquidated,with Juan receiving $5,000 in money and other property having a $6,000 FMV.Juan's basis in his Riverwalk stock is $8,000.Upon liquidation,Juan must recognize a gain of
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Multiple Choice
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Answer:

C

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In general,a noncorporate shareholder that receives a distribution in complete liquidation of the liquidating corporation recognizes his or her entire realized gain as a capital gain.
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True False
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Answer:

True

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Identify which of the following statements is false.
Multiple Choice
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Identify which of the following statements is true.
Multiple Choice
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Liquidation and dissolution have the same legal meaning.
True False
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Liquidation rules generally are applied the same to the following organizations except for
Multiple Choice
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Bluebird Corporation owns and operates busses and has decided to liquidate its operations.Victor,who owns 80% of the company's stock,will receive all of the busses,repair parts inventory,and all tools and equipment.He plans to start a bus company in another town.Penny,who owns 20% of the stock,wants nothing to do with the new bus business and will receive a cash distribution.Bluebird will incur about $20,000 of expenses in connection with the liquidation.What tax issues should Victor,Penny,and Bluebird consider with respect to the liquidation?
Essay
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Section 336 prevents recognition of a loss when making a pro rata distribution of property to a related person.
True False
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When a corporation liquidates,it performs three activities.What is the general order of these activities in a plan of liquidation?
Multiple Choice
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Robot Corporation is liquidated,with Marty receiving property having an adjusted basis of $60,000 and an FMV of $90,000.The property is subject to a $80,000 mortgage,which Marty assumes.Marty's basis in the Robot stock surrendered is $50,000.Marty must recognize
Multiple Choice
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Property received in a corporate liquidation by a noncorporate shareholder has
Multiple Choice
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Are liquidation and dissolution the same? Explain your answer.
Essay
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Texas Corporation is undergoing a complete liquidation and distributes land to Robert,one of its shareholders,in exchange for all of Robert's stock.The land has a basis of $300,000 and an FMV of $400,000 on Texas Corporation's books and is subject to a $325,000 liability.Robert assumes the liability on the property.Robert's basis in his Texas Corporation stock is $100,000.What is the amount of gain or loss recognized by Robert on the distribution?
Multiple Choice
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Generally,a corporation recognizes a gain,but not a loss,on a liquidating distribution.
True False
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In a complete liquidation of a corporation,which of the following is false?
Multiple Choice
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Riverwalk Corporation is liquidated,with Juan receiving $5,000 in money,other property having a $6,000 FMV,and a $1,000 mortgage on the property.Juan's basis in his River walk stock is $8,000.Upon liquidation,Juan must recognize a gain of
Multiple Choice
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In a complete liquidation,a liability assumed by a shareholder reduces the shareholder's amount realized.
True False
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Identify which of the following statements is true.
Multiple Choice
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Moya Corporation adopted a plan of liquidation last year.All but a nominal amount of Moya's assets are distributed to its shareholders within the year.Which of the following statements is not true?
Multiple Choice
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