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1. Groll Inc distributes to a shareholder that was originally purchased for $38,000, with AB of $22,000 and FMV of $25,000. What is recognized gain?
Recognized gain = $3,000 (FMV - AB) (25,000 - 23,000)
Mall Inc distributes cash of $40,000 and a building with FMV of $110,000, AB of $20,000, and mortgage of $130,000. What is recognized gain?
Recognized gain = $110,000 ( mortgage - AB)($130,000 - 20,000) (mortgage > FMV)
Mall Inc distributes cash of $40,000 and a building with FMV of $110,000, AB of $20,000, and mortgage of $60,000. What is recognized gain?
- If liability < FMV; then recognized gain = FMV - AB
- Recognized gain = 80,000 (100,000 - 20,000)
If the liquidation does not pay the income tax from gains recognized on liquidation distributions, the shareholder must pay the tax. Tor F
Orchards Corp distributes an asset with AB of 20,000 and FMV of 50,000. Its tax rate is 34%. What is tax liabitlity
- Recognized income = 30,000 (FMV - AB)
- Tax liability = 10,200 (30,000 x.34)
A shareholder contributes to Lossacre with a basis of 15,000 and FMV of 10,000. Next year, Lossacre is old for 8,000. What is recognized loss?
- reduce ab to 10,000
- recognized loss = 2,000 (10,000-8,000)