61) When a liquidating corporation pays off an unsecured debt

Question : 61) When a liquidating corporation pays off an unsecured debt : 1876443

61) When a liquidating corporation pays off an unsecured debt obligation,

A) the corporation recognizes no gain or loss if it uses appreciated property.

B) the corporation recognizes no gain or loss if it uses cash.

C) the corporation recognizes any gains but not losses realized.

D) the corporation recognizes losses but not gains realized.

62) Identify which of the following statements is true.

A) The Sec. 332 nonrecognition rules apply to the parent corporation when a subsidiary corporation transfers property to the parent corporation in payment of the subsidiary's debt obligation.

B) A subsidiary corporation is prevented from recognizing gain or loss when transferring property to its parent corporation in satisfaction of an indebtedness it owes to the parent corporation as part of its complete liquidation.

C) Nonrecognition of gain or loss rules apply to a subsidiary corporation when, pursuant to its complete liquidation, the subsidiary transfers property to a third-party creditor.

D) All of the above are false.

63) Parent Corporation owns all of Subsidiary Corporation's stock. In addition, Parent Corporation owns $100,000 (face amount and basis) of Subsidiary Corporation's bonds. When Subsidiary Corporation is completely liquidated, it distributes property with a $70,000 adjusted basis and a $100,000 FMV to Parent Corporation in redemption of the Subsidiary Corporation bonds. Following the liquidation, Parent Corporation will have a basis in the Subsidiary Corporation property received for the bonds of

A) $0.

B) $70,000.

C) $100,000.

D) none of the above

64) Santa Fe Corporation adopts a plan of liquidation late in the current tax year in which it expects to earn $100,000 profits from its operating activities. Santa Fe's operating activities are discontinued before the end of the year. Pursuant to the liquidation, it distributes assets, which result in the recognition of $30,000 of ordinary losses. Santa Fe also distributes assets that have appreciated in value, which results in the recognition of $30,000 of ordinary gains. Generally, Santa Fe Corporation should distribute

A) the $30,000 of ordinary loss property in the current year and the $30,000 of ordinary gain property next year.

B) both the ordinary loss and gain properties this year.

C) both the ordinary losses and gains properties next year.

D) the $30,000 of ordinary gain property in the current year and the $30,000 of ordinary loss property next year.

65) Parent Corporation owns 70% of Sam Corporation's single class of stock. This year, Parent Corporation purchases for cash the remaining 30% of Sam Corporation's stock from four individual investors pursuant to a tender offer. A plan of liquidation is approved by Sam Corporation's shareholders during the last month of this year, and Sam Corporation's assets are distributed by year-end to Parent Corporation in exchange for all of Sam's outstanding stock. Parent Corporation should

A) not recognize any gains and losses on the redemption.

B) recognize gains and losses on the redemption.

C) recognize gains but not losses on the redemption.

D) recognize losses but not gains on the redemption.

66) A liquidation must be reported to the Internal Revenue Service on Form 966

A) within 60 days of the adoption of a plan of liquidation.

B) that is filed with the national IRS office.

C) whether the shareholders' realized gain is recognized or not.

D) by the shareholders.

67) If a liquidating subsidiary corporation primarily has loss property to distribute, the parent corporation should

A) follow Sec. 332 rules.

B) avoid Sec. 332 rules.

C) follow Sec. 332 rules but avoid Sec. 337.

D) none of the above

68) Identify which of the following statements is false.

A) A corporation must file an information return with the Internal Revenue Service within thirty days of adopting a resolution to liquidate.

B) The adoption of a formal plan of liquidation can provide additional benefits under tax laws to the corporation and its shareholders.

C) A plan of liquidation must be produced in writing in order to be accepted by the Internal Revenue Service.

D) The adoption of a plan of liquidation permits a parent corporation a three-year time period to carry out the complete liquidation of its subsidiary.

69) A Sec. 332 liquidation requires a complete statement be filed with the distributee's tax return

A) when a liquidating distribution is received.

B) when the liquidation plan is adopted.

C) when the liquidation is compiled.

D) No statement is required with the return.

70) A plan of liquidation

A) must be written.

B) details the steps to be undertaken in carrying out the liquidation.

C) must be a formal plan.

D) must be completed in one year.

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