Corporate Tax law Custom Paper

1. A holds 40 shares of X Corp stock short-term with a $50k basis and 60 shares long-term with a $30k basis. X Distributes $100k to A in complete liquidation. What gain/loss will be recognized in this complete liquidation to the shareholder A? (20 points)
2. X Corp has 100 shares of common stock outstanding, of which 80 shares are owned by individual A (stock basis-$300k) and 20 shares are owned by individual B (stock basis-$600k). X’s only assets are: Greenacre (Adjusted basis $100k, FMV $500k), and Brownacre (Adjusted Basis $800k, FMV $500k)
Both assets were transferred to X 18 months ago in a §351 transaction. At that time Brownacre had an adjusted basis of $800k and a FMV of $900k. In the current year, before taking into account any of the transactions below, X had an accumulated E and P and no current E and P.
a) Pursuant to a plan of complete liquidation, X distributes each asset pro rata to its shareholders. What are the tax consequences to X, A and B? (in determining shareholder level tax consequences, ignore any adjustment resulting from the corporate-level tax imposed on X on the distribution) (25 points)
b) Same as (a), except that Brownacre had an $800k adjusted basis and $700k FMV at the time it was transferred to X in a §351 transaction and a§362(e)(2) did not apply to the transfer. (20 points)
3. Determine whether or not the transactions described below qualify as a reorganization under §368:
a) T, Inc. has 200 shares of common stock outstanding, owned 81% by A and 19% by B. In a single transaction, P, Inc. acquires all the stock of T in a stock-for-stock exchange in which A receives P voting stock and B receives P nonvoting preferred stock that is not nonqualified preferred stock. (10 points)
b) Same as (a), except that P liquidates T one week after acquiring the T stock. (10 points)
c) Same as (a), above, except that P acquired 21% of T stock for cash 15 years ago and acquired the remaining 79% upon the merger of S, a transitory subsidiary of P formed to effect the transaction, into T. In the merger, T’s shareholders (other than P) received P voting stock for their T stock. (10 points)
d) T, Inc. a computer software manufacturer, merges into P, Inc., a book publisher. T shareholders receive P voting stock (75% of the consideration) and P long-term bonds (25% of the consideration). One month after the merger, P sells T’s assets and uses the proceeds to expand its book publishing business. (10 points)
e) T, Inc. owns operating assets with a FMV of $200k subject to liabilities of $50k. P, Inc. acquires the assets of T (subject to $25k in liabilities) in exchange for P voting stock worth $150k and $25k cash. T uses the cash to pay off the remaining liabilities and then liquidates, distributing the P voting stock to its shareholders. (10 points)

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