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31) Identify which of the following statements true. A) The loss

Question : 31) Identify which of the following statements true. A) The loss : 1876440

31) Identify which of the following statements is true.

A) The loss realized on the sale of a property is disallowed when such property was received by a corporation as a contribution of capital in a transaction having as its principal purpose the recognition of loss pursuant to the corporation's subsequent liquidation later in the same taxable year.

B) Losses claimed in a tax return filed before the adoption of the plan of liquidation are not restricted by Sec. 336(d)(2).

C) Properties acquired by a liquidating corporation as a capital contribution occurring within three years of the adoption of a plan of liquidation are generally presumed to have a tax avoidance motive.

D) All of the above are false.

32) The stock of Cooper Corporation is 70% owned by Carole and 30% owned by Carole's brother, Chris. During 2013, Chris transferred property (basis of $100,000 and FMV of $120,000) as a contribution to the capital of Cooper. During February 2014, Cooper adopted a plan of liquidation and subsequently made a pro rata distribution of the property back to Carole and Chris. At the time of the liquidation, the property had an FMV of $80,000. What amount of loss can be recognized by Cooper on the distribution of property?

A) $0

B) $6,000

C) $12,000

D) $20,000

33) Last year, Toby made a capital contribution of a pretzel maker having a $2,000 adjusted basis and a $200 FMV to Keke Corporation in exchange for additional stock. This year, Keke Corporation adopted a plan of liquidation. Prior to the adoption of the liquidation plan, Keke had not used the pretzel maker in connection with the conduct of its trade or business. Which of the following statements is true?

A) Keke Corporation may recognize a loss of $1,800.

B) Keke Corporation may recognize a loss of $200.

C) Keke Corporation's basis for determining the loss will be $2,000.

D) Keke Corporation's basis for determining the loss will be $200.

34) Toby made a capital contribution of a pretzel maker having a $2,000 adjusted basis and a $200 FMV to Keke Corporation in exchange for additional stock last year. Later that same year, Keke sold the pretzel maker for $300. This year, Keke adopted a plan of liquidation. Previously, Keke had never used the pretzel maker in connection with the conduct of its trade or business. The sale was reported on Keke's current tax return. What reporting option does Keke Corporation not have because of its plan of liquidation?

A) File an amended tax return for the tax year in which the tax loss was originally claimed.

B) Recapture the loss on the tax return for the year the plan for liquidation was adopted.

C) Recognize a gain of $100 for the current year.

D) none of the above

35) Dexer Corporation is owned 70% by Amy and 30% by Brad. Dexer Corporation owns Eagle Corporation stock with a $50,000 adjusted basis and a $30,000 FMV. The stock is not disqualified property. As part of a complete liquidation, the Eagle Corporation stock is distributed to Amy. Amy's basis in her Dexer stock is $40,000. Dexer Corporation will recognize

A) no loss.

B) a $10,000 loss.

C) a $20,000 loss.

D) none of the above

36) Cowboy Corporation owns 90% of the single class of stock in Doggie Corporation. The other 10% is owned by Miguel, an individual. Cowboy's basis in its Doggie Corporation stock is $100,000 and Miguel's basis is $50,000. Doggie Corporation distributes property having an adjusted basis of $150,000 and an FMV of $500,000 to Cowboy Corporation, and $60,000 of money to Miguel as a liquidating distribution. Doggie and Cowboy Corporations must recognize gain of:

A)

Doggie

Cowboy

$0

$0

B)

Doggie

Cowboy

$10,000

$0

C)

Doggie

Cowboy

$400,00

$350,000

D)

Doggie

Cowboy

$350,000

$400,000

37) Parent Corporation owns 100% of the single class of stock of Subsidiary Corporation. Parent's basis in the Subsidiary stock is $500,000 when Parent completely liquidates Subsidiary Corporation within a single tax year. The Subsidiary Corporation assets have a $700,000 adjusted basis and an $800,000 FMV at liquidation. As a result of the liquidation, Parent must recognize a

A) $0 gain.

B) $200,000 gain.

C) $300,000 gain.

D) none of the above

38) Identify which of the following statements is true.

A) A parent corporation cannot liquidate a subsidiary corporation (having but a single class of stock) and avoid recognizing its realized gain unless the parent corporation owns at least 80% of the subsidiary's stock.

B) The liquidation of a subsidiary corporation must be completed within one tax year to receive nonrecognition treatment.

C) The provisions permitting a tax-free liquidation of a subsidiary corporation apply to both corporate and noncorporate shareholders of the subsidiary.

D) All of the above are false.

39) Carly owns 25% of Base Corporation's single class of stock and Premier Corporation owns the remaining 75%. Carly's basis in the Base stock is $200,000 and Premier Corporation's basis in the Base stock is $600,000. Carly receives property with a $175,000 adjusted basis and a $250,000 FMV and Premier Corporation receives property with a $600,000 adjusted basis and a $750,000 FMV in complete liquidation of Base Corporation. All of Base's cash is used to pay its liabilities. Which of following statements is correct concerning the tax effects of the liquidation?

A) Neither Carly nor Premier Corporation will recognize a gain.

B) Carly will recognize some gain but Premier Corporation will not recognize any gain.

C) Both Carly and Premier will recognize some gain.

D) Carly will not recognize any gain but Premier will recognize some gain.

40) When a subsidiary corporation is liquidated into its parent corporation under a formal plan of liquidation, the distributions must take place within

A) a six-month period.

B) a 12-month period.

C) the current and next tax years.

D) the current and next three tax years.

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