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94) In a Sec. 332 liquidation, can a subsidiary corporation recognize losses on distributions to either the parent corporation or minority shareholders? 95) In a Sec. 332 liquidation, what bases do both the parent and minority shareholders take in the assets received? 96) What are the differences, if any, in the tax.
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80) Parent Corporation purchases a machine (a five-year property) for $20,000. It claims $4,000 of depreciation under the MACRS rules in the first year it owns the property. At the close of business on the last day of the first year, Parent sells the machine to a 100%-owned corporation (Subsidiary).
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41) Identify which of the following statements is true. A) To qualify as a Type A reorganization, generally at least 50% of the total consideration used must be acquiring corporation stock. B) A Type A reorganization has the advantage of avoiding the acquisition of unknown and contingent liabilities. C) A merger usually involves.
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41) Parent Corporation sells land (a capital asset) to Subsidiary Corporation in an intercompany transaction, recognizing a $25,000 gain. Subsidiary holds the land as an investment for five years before selling the land to a nonmember of the group on an installment basis in a sale in which a $50,000.
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51) Sandy, a cash method of accounting taxpayer, has a basis of $46,000 in her 500 shares of Newt Corporation stock. She receives the following distributions as part of Newt's plan of liquidation. March 31, 2007 $10,000 July 15, 2007 10,000 November 15, 2007 10,000 January 15, 2008 10,000 The amount of the final distribution is not known on.
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92) Alpha, Beta, Gamma, and Delta Corporations form a controlled group. Delta is a nonincludible regulated investment company. Only Alpha, Beta, and Gamma are able to file their income tax returns on a consolidated basis. What options are available for allocating the 15%, 25%, and 34% tax rates to the.
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72) Hydrangia Corporation reports the following results for the current year: Taxable income              $300,000 Interest on private activity bonds              20,000 Life insurance proceeds              250,000 Dividends-received deduction              50,000 Depreciation claimed for: Taxable income purposes              175,000 AMT purposes              130,000 Adjusted current earnings              800,000 What is Hydrangia Corporation's alternative minimum tax liability? 73) Barker Corporation, a personal service company, has $200,000 of.
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21) Identify which of the following statements is true. A) A corporation may be required to file a separate return and file with an affiliated group in the same calendar year. B) When a corporation joins in filing a consolidated return, taxable income of the member is combined with other members' taxable.
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102) Rich Company sold equipment this year for $50,000. The equipment had been depreciated using 200% declining balance. Accumulated depreciation totals $60,000 for regular tax purposes and $70,000 for AMTI. The equipment originally cost $90,000. What AMT issues does this sale present? 103) Church Corporation is a closely held C corporation..
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80) In the current year, Sun Corporation's federal income taxes before credits are $220,000. Its TMT is $100,000. Their only available credit is a research credit (part of the general business credit) of $160,000. The general business credit is limited to what amount? 81) Investors Corporation has ten unrelated individual shareholders.
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41) Parent Corporation for ten years has owned all of the stock of Subsidiary Corporation, which manufactures widgets. Parent's basis in Subsidiary's stock is $500,000. Subsidiary Corporation is insolvent and has no assets to redeem any of the stock that Parent Corporation owns when it liquidates. Nearly all of Subsidiary's.
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51) Identify which of the following statements is true. A) The parent corporation may elect that the affiliated group use its NOL as a carryforward only. B) A portion of a consolidated NOL can be carried back or forward to a separate return year of an individual group member. C) The entire consolidated.
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83) Parent Corporation owns 100% of the stock of Subsidiary Corporation. The adjusted basis of its stock investment is $100,000. A plan of liquidation is adopted. Subsidiary distributes to Parent assets with a $325,000 FMV and a $275,000 adjusted basis. Subsidiary also distributes liabilities in the amount of $40,000. Subsidiary.
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11) In a Type B reorganization, the acquiring corporation obtains substantially all of the target corporation's assets in exchange for its voting stock and a limited amount of other consideration. 12) In a Type B reorganization, the target corporation exchange their stock for the acquiring corporation's voting stock, and the target.
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84) Eagle Corporation, a personal holding company, has the following results: Taxable income              $200,000 Dividends-received deduction              30,000 Excess charitable contributions              10,000 Long-term capital gains              10,000 Federal income taxes              61,000 Calculate the PHC tax. 85) Raptor Corporation is a PHC for 2009 and reports $200,000 of taxable income on its federal income tax return. Operating profit              $100,000 Long-term capital gain             .
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76) Barker Corporation, a personal service company, has $200,000 of taxable income. Barker has tax preferences and positive adjustments of $200,000 and negative adjustments of $140,000 for alternative minimum tax purposes. No credits are available. Barker's regular tax liability is $70,000. How much is its alternative minimum tax liability? 77) Drury.
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100) Smartmoney, Inc. was formed by three wealthy dentists to pool their investment funds. They each invested $200,000 in the corporation, which was immediately used to purchase stocks to be held as investments. The first year, the corporation received dividends of $70,000 and filed a tax return paying a corporation.
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51) Identify which of the following statements is true. A) A split-off Type D reorganization occurs when part of the assets of one corporation are transferred to a controlled corporation in exchange for its stock, and shares of the controlled corporation's stock are distributed to all of the distributing corporation's shareholders.
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87) The following information is reported by Acme Corporation. Cost of goods sold              $350,000 Average inventory balance              35,000 Average accounts receivable balance              65,000 Sales (all on account)              325,000 Average accounts payable balance              45,000 Operating expenses (excluding depreciation)500,000 Purchases              40,000 What is Acme Corporation's average operating cycle as a percentage of the year? 88) Given the following information about Jones.
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89) Penny, a cash-basis taxpayer, reported a $15,000 long-term capital gain on the exchange of her Midwest Corporation stock when the corporation liquidated in 2012. Midwest subsequently lost a lawsuit and Penny paid an additional $3,000 in 2014 as her part of the settlement. What are the tax consequences to.
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94) Explain the carryover provisions of the minimum tax credit. 95) What is a personal holding company? 96) Define personal holding company income. 97) What is the effect of the two-pronged test that allows the exclusion from PHCI of certain AIR (adjusted income from rents)? 98) The courts and the Treasury Regulations have mentioned.
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1) Liquidation and dissolution have the same legal meaning. 2) In a complete liquidation, a liability assumed by a shareholder reduces the shareholder's amount realized. 3) 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.
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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.
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104) Eight individuals own Navy Corporation, a C corporation. Three shareholders make up the board of directors and own 51% of the stock. The corporation has a successful manufacturing business. It has accumulated $3 million of E&P and expects to accumulate another $200,000 of E&P annually. Annual dividend payments are.
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1) Taxable acquisition transactions can either be a purchase of assets or a purchase of stock. 2) In a taxable asset acquisition, the purchaser does not acquire unknown and contingent liabilities. 3) The Sec. 338 deemed sale rules require that 70% of the target corporation's stock be owned. 4) Tax attributes of the.
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69) Brown Corporation has assets with a $650,000 basis and an $800,000 FMV. The assets are subject to $250,000 in liabilities. Clark Corporation acquires all of Brown's assets and liabilities for $600,000 in cash. Brown Corporation then liquidates. What is Clark Corporation's basis in the acquired assets? 70) Pacific Corporation acquires.
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102) WorldCom is a telecommunications company that provides national and international service to local and long-distance customers. On September 14, 1998, WorldCom acquired MCI Communications Corporation (MCI) pursuant to a merger agreement. The acquisition can be divided into three stages: 1)WorldCom created an acquisitions subsidiary (TC Investments Corporation) by transferring WorldCom.
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100) Discuss the advantages and disadvantages of a tax-free reorganization as compared with a taxable transaction. 101) John Van Kirk owns all the stock of Monmouth Restaurant Corporation in Pittsburgh. John would like to sell his business and retire to sunny Florida now that he has turned 65. Pam, a long-time.
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86) Baxter Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $500,000 to Duke Corporation for 90% of Duke's single class of stock worth $500,000. The Duke stock is then exchanged for Frank's 50% interest in Baxter Corporation. Frank's basis in the Baxter stock he surrenders.
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21) 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 A) a $40,000 loss. B) no gain or loss. C).
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61) Identify which of the following statements is true. A) The step-transaction doctrine has always been used by the IRS to convert a tax-free transaction into a taxable transaction. B) Tax attributes carry over from the target corporation to the acquiring corporation in all acquisitive reorganizations. C) In a Type A reorganization, the.
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31) Broom Corporation transfers assets with an adjusted basis of $300,000 and an FMV of $400,000 to Docker Corporation in exchange for $400,000 of Docker Corporation stock as part of a tax-free reorganization. The Docker stock had been purchased from its shareholders one year earlier for $350,000. How much gain.
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61) Last year, Trix Corporation acquired 100% of Track Corporation. The acquisition occurred on July 1, which was five months after Track's creation. The corporations filed separate returns that year and have filed consolidated returns since then. The group results for the years, excluding the NOL deduction, are shown below. Corporation Taxable.
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80) Acme Corporation acquires Fisher Corporation's assets in a Type A reorganization for $800,000 of Acme's nonvoting preferred stock and $200,000 (face amount and FMV) of securities. The assets have an adjusted basis of $600,000 and an FMV of $1,500,000. In addition, Acme Corporation assumes $500,000 of Fisher's liabilities. At.
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31) Identify which of the following statements is false. A) A corresponding item includes the income, gain, deduction, or loss amount reported by the buyer from an intercompany transaction, or from property acquired in an intercompany transaction. B) Affiliated groups of corporations filing a consolidated tax return are not eligible for the.
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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.
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73) Jeffrey Corporation owns 85% of Placer Corporation and 25% of Mercer Corporation. Placer Corporation owns 60% of Mercer Corporation and 45% of Tyson Corporation. Jeffrey Corporation also owns 85% of Apple Corporation and Apple Corporation owns 30% of Tyson Corporation. Which of these corporations are members of an affiliated.
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61) When using the Bardahl formula, an increase in accounts payable (while holding purchases and operating expenses constant) has which of the following effects on the working capital requirements? A) increase B) decrease C) no effect D) increase, decrease, or no effect, depending on other factors 62) Identify which of the following statements is true. A).
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90) Green Corporation, a closely held operating corporation, reports the following: Taxable income              $200,000 Long-term capital gain              30,000 Dividends-received deduction              20,000 Federal income taxes on long-term capital gain11,700 Accumulated earnings credit              80,000 Federal income taxes              65,150 Calculate Green's accumulated taxable income. 91) Lawrence Corporation reports the following results during the current year: Taxable income              $500,000 Federal income taxes              170,000 Dividends paid:.
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