Corporate nonliquidating distributions problems engine dating

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[LO5] EG Corporation redeemed 200 shares of stock from one of its shareholders in exchange for 0,000. The distribution was in exchange for 50% of Rusty’s stock in the company.

The redemption represented 20% of the corporation’s outstanding stock. At the time of the distribution, the shares had a fair market value of 0 per share.

The redemption was treated as an exchange by the shareholder. Rusty’s income tax basis in the shares was per share.

During this year, the corporation made the following distributions to its shareholders: 03/31: Paid a “dividend” of /share to each shareholder (,000 in total).

06/30: Redeemed 200 shares of Joe’s stock for 0,000.

1) Corporate distributions that exceed earnings and profits are always capital gains.

2) Corporations may always use retained earnings as a substitute for earnings and profits.

98) How does a shareholder classify a distribution for tax purposes?3) When computing E & P, Section 179 property must be expensed ratably over a five-year period, starting with the month in which it is expensed for Sec. 4) A shareholder's basis in property distributed as a dividend is its fair market value.5) When appreciated property is distributed in a nonliquidating distribution, the net effect on the distributing corporation's E&P is that it is reduced by the FMV of the property distributed and increased by the gain (net of federal income taxes) recognized due to the property distribution.By what amount does EG reduce its total E&P as a result of the redemption under the following E&P assumptions? EG’s total E&P at the time of the distribution was ,000,000. [LO5] Spartan Corporation redeemed 25% of its shares for ,000 on July 1 of this year, in a transaction that qualified as an exchange under §302(a). Spartan had total E&P of ,000,000 at the time of the distribution. What is the amount and character (capital gain or dividend) of any income or gain recognized per share by Rusty as a result of the partial liquidation? [LO6] Wolverine Corporation made a distribution of 0,000 to Rich Rod, Inc. The distribution was in exchange for 50% of Rich Rod, Inc.’s stock in the company.Spartan’s accumulated E&P at the beginning of the year was ,000. Spartan made dividend distributions of

98) How does a shareholder classify a distribution for tax purposes?

3) When computing E & P, Section 179 property must be expensed ratably over a five-year period, starting with the month in which it is expensed for Sec. 4) A shareholder's basis in property distributed as a dividend is its fair market value.

5) When appreciated property is distributed in a nonliquidating distribution, the net effect on the distributing corporation's E&P is that it is reduced by the FMV of the property distributed and increased by the gain (net of federal income taxes) recognized due to the property distribution.

By what amount does EG reduce its total E&P as a result of the redemption under the following E&P assumptions? EG’s total E&P at the time of the distribution was $2,000,000. [LO5] Spartan Corporation redeemed 25% of its shares for $2,000 on July 1 of this year, in a transaction that qualified as an exchange under §302(a). Spartan had total E&P of $8,000,000 at the time of the distribution. What is the amount and character (capital gain or dividend) of any income or gain recognized per share by Rusty as a result of the partial liquidation? [LO6] Wolverine Corporation made a distribution of $500,000 to Rich Rod, Inc. The distribution was in exchange for 50% of Rich Rod, Inc.’s stock in the company.

Spartan’s accumulated E&P at the beginning of the year was $2,000. Spartan made dividend distributions of $1,000 on June 1 and $4,000 on August 31. in partial liquidation of the company on December 31 of this year. At the time of the distribution, the shares had a fair market value of $200 per share.

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98) How does a shareholder classify a distribution for tax purposes?3) When computing E & P, Section 179 property must be expensed ratably over a five-year period, starting with the month in which it is expensed for Sec. 4) A shareholder's basis in property distributed as a dividend is its fair market value.5) When appreciated property is distributed in a nonliquidating distribution, the net effect on the distributing corporation's E&P is that it is reduced by the FMV of the property distributed and increased by the gain (net of federal income taxes) recognized due to the property distribution.By what amount does EG reduce its total E&P as a result of the redemption under the following E&P assumptions? EG’s total E&P at the time of the distribution was $2,000,000. [LO5] Spartan Corporation redeemed 25% of its shares for $2,000 on July 1 of this year, in a transaction that qualified as an exchange under §302(a). Spartan had total E&P of $8,000,000 at the time of the distribution. What is the amount and character (capital gain or dividend) of any income or gain recognized per share by Rusty as a result of the partial liquidation? [LO6] Wolverine Corporation made a distribution of $500,000 to Rich Rod, Inc. The distribution was in exchange for 50% of Rich Rod, Inc.’s stock in the company.Spartan’s accumulated E&P at the beginning of the year was $2,000. Spartan made dividend distributions of $1,000 on June 1 and $4,000 on August 31. in partial liquidation of the company on December 31 of this year. At the time of the distribution, the shares had a fair market value of $200 per share.

,000 on June 1 and ,000 on August 31. in partial liquidation of the company on December 31 of this year. At the time of the distribution, the shares had a fair market value of 0 per share.

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