TXX 5769
Pick the best answer.
1. With respect to a completeliquidation of a corporation, which Code Section or Sections provide the rulesregarding recognition of gain or loss by shareholders - other than ashareholder that is the corporate parent meeting the requirements of CodeSection 1504(a)(2) - of the liquidating corporation?
a. Code Section 336(b).
b. Code Section 337.
c. Code Sections1001(c), 331(a) and (c).
d. Code Sections 1001(a) and 331(b).
2. With respect to a completeliquidation of a corporation, which Code Section provides the rules regardingrecognition of gain or loss by a shareholder that is the corporate parentmeeting the requirements of Code Section 1504(a)(2)? Assume the plan ofliquidation is adopted and the liquidation is completed within one calendaryear.
a. Code Section 336(a).
b. Code Section 332(a).
c. Code Section 331(a).
d. Code Section 334(b).
3. With respect to the completeliquidation of a corporation, which Code Section provides the general rule regardingrecognition of gain or loss by the liquidating corporation with respect todistributions to shareholders covered by question 1?
a. Code Section 336(b).
b. Code Section 331.
c. Code Sections1001(c), 331(a) and (c).
d. Code Section 336(a).
4. With respect to the completeliquidation of a corporation, which Code Section provides the general rule regardingrecognition of gain or ss by the liquidating corporation with respect todistributions to the shareholder covered by question 2?
a. Code Section 334.
b. Code Section 336(a).
c. Code Section 337.
d. none of the above.
5. With respect to the completeliquidation of a corporation, which Code Section governs the determination of thebasis in the hands of a transferee shareholder covered by question 1 ofproperty distributed to the shareholder by the liquidating corporation?
a. Code Section 334(a).
b. Code Section 334(b).
c. Code Section 331.
d. none of the above.
6. With respect to the completeliquidation of a corporation, which Code Section governs the determination of thebasis in the hands of the transferee shareholder covered by question 2 ofproperty distributed to it by the liquidating corporation?
a. Code Section 334(a).
b. Code Section 334(b).
c. Code Section 331.
d. none of the above.
7. ABC Corporation owns 80 percent of thevoting stock and voting power and stock representing 80% of the total value ofDEF Corporation. Linda owns theremaining 20 percent of DEF's stock by voting power and value. ABCCorporation's basis for its DEF Corporation stock is $300,000 and Linda's basisin her DEF Corporation stock is $80,000. Pursuant to a plan of completeliquidation of DEF Corporation adopted on January 15, 2015, ABC Corporation, onSeptember 15, 2015 surrendered all of its stock in DEF Corporation and inreturn, ABC Corporation received property with a $400,000 adjusted basis to DEFCorporation and a $480,000 fair market value. On the same day, Lindasurrendered all of her stock in DEF Corporation, and Linda received propertywith a $130,000 adjusted basis to DEF Corporation and a $120,000 fair market value. How much gain or loss is recognized by Lindaon this transaction and what Code Section or Sections govern?
a. $40,000; Code Section 336(b).
b. $50,000; Code Section 331 and336.
c. $40,000; CodeSections 1001, 331(a) and (c).
d. $10,000; Code Sections 1001(a) and 331(b).
8. ABC Corporation owns 80 percent of thevoting stock and voting power and stock representing 80% of the total value ofDEF Corporation. Linda owns theremaining 20 percent of DEF's stock by voting power and value. ABCCorporation's basis for its DEF Corporation stock is $300,000 and Linda's basisin her DEF Corporation stock is $80,000. Pursuant to a plan of completeliquidation of DEF Corporation adopted on January 15, 2015, ABC Corporation, onSeptember 15, 2015 surrendered all of its stock in DEF Corporation and inreturn, ABC Corporation received property with a $400,000 adjusted basis to DEFCorporation and a $480,000 fair market value. On the same day, Lindasurrendered all of her stock in DEF Corporation, and Linda received propertywith a $130,000 adjusted basis to DEF Corporation and a $120,000 fair market value.How much gain or loss is recognized by ABC Corporation on this transaction andwhat Code Section or Sections govern?
. $180,000; CodeSections 1001, 331(a) and (c).
b. $0;Code Section 332(a).
c. 10,000; Code Section 332(a).
d. 180,000; Code Section 336.
9. ABC Corporation owns 80 percent of thevoting stock and voting power and stock representing 80% of the total value ofDEF Corporation. Linda owns theremaining 20 percent of DEF's stock by voting power and value. ABCCorporation's basis for its DEF Corporation stock is $300,000 and Linda's basisin her DEF Corporation stock is $80,000. Pursuant to a plan of completeliquidation of DEF Corporation adopted on January 15, 2015, ABC Corporation, onSeptember 15, 2015 surrendered all of its stock in DEF Corporation and inreturn, ABC Corporation received property with a $400,000 adjusted basis to DEFCorporation and a $480,000 fair market value. On the same day, Lindasurrendered all of her stock in DEF Corporation, and Linda received propertywith a $130,000 adjusted basis to DEF Corporation and a $120,000 fair market value.How much gain or loss is recognized by DEF Corporation with respect to thedistribution to ABC Corporation, and what Code Section governs?
a. $180,000; CodeSections 1001, 331(a) and (c).
b. $0;Code Section 332(a).
c. $10,000; Code Section 332(a).
d. $0;Code Section 337.
10. ABC Corporation owns 80 percent of thevoting stock and voting power and stock representing 80% of the total value ofDEF Corporation. Linda owns theremaining 20 percent of DEF's stock by voting power and value. ABCCorporation's basis for its DEF Corporation stock is $300,000 and Linda's basisin her DEF stock is $80,000. Pursuant to a plan of complete liquidation of DEFCorporation adopted on January 15, 2015, ABC Corporation, on September 15, 2015surrendered all of its stock in DEF Corporation and in return, ABC Corporation receivedproperty with a $400,000 adjusted basis to DEF Corporation and a $480,000 fairmarket value. On the same day, Linda surrendered all of her stock in DEFCorporation, and Linda received property with a $130,000 adjusted basis to DEFCorporation and a $120,000 fair market value. Linda's basis in the propertydistributed to her by DEF Corporation is and the governing Code Section is:
. $120,000; CodeSection 334(b).
b. $130,000: CodeSection 334(a)
c. $80,000; Code Section331.
d. $120,000: Code Section 334(a).
11. ABC Corporation owns 80 percent of thevoting stock and voting power and stock representing 80% of the total value ofDEF Corporation. Linda owns theremaining 20 percent of DEF's stock by voting power and value. ABCCorporation's basis for its DEF Corporation stock is $300,000 and Linda's basisin her DEF Corporation stock is $80,000. Pursuant to a plan of completeliquidation of DEF Corporation adopted on January 15, 2015, ABC Corporation, onSeptember 15, 2015 surrendered all of its stock in DEF Corporation and inreturn, ABC Corporation received property with a $400,000 adjusted basis to DEFCorporation and a $480,000 fair market value. On the same day, Lindasurrendered all of her stock in DEF Corporation, and Linda received propertywith a $130,000 adjusted basis to DEF Corporation and a $120,000 fair market value. ABC Corporation's basis in the propertydistributed to it, and the governing Code Section is?
a. $480,000; CodeSection 334(a).
b. $400,000; CodeSection 334(b).
c. $300,000; CodeSection 331.
d. $400,000; CodeSection 334(a).