8. A. an individual, owns all 100 shares of X Co. A's basis in these shares is si per share (S100 tota). 8a) A transfers 10 shares to X in exchange for cash of 10. How will this transaction be treated for tax purposes? 8b) Suppose instead that there are 2 shareholders, A and B. Each owns 50 shares of X Co. A transfers all 50 shares to X in exchange for cash of 50. How will this transaction be treated? 8c) Same as (b) except that A and B are husband and wife. Would this change your answer?

8. A. an individual, owns all 100 shares of X Co. A's basis in these shares is si per share (S100 tota). 8a) A transfers 10 shares to X in exchange for cash of 10. How will this transaction be treated for tax purposes? 8b) Suppose instead that there are 2 shareholders, A and B. Each owns 50 shares of X Co. A transfers all 50 shares to X in exchange for cash of 50. How will this transaction be treated? 8c) Same as (b) except that A and B are husband and wife. Would this change your answer?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2. Rye Corporation is owned 55% (55 shares) by Roger, 30% (30 shares) by Yolanda and 15% (15 shares) by Eric. Rye has E&P of $400,000. Roger's stock basis is $200,000, Yolanda's stock basis is $130,000 and Eric's stock basis is $80,000. a. What is the tax result to Roger if Rye redeems 30 shares for $350,000? Yolanda is Roger's wife. b. What is the tax result to Roger if Rye redeems 45 shares for $500,000? Yolanda is Roger's wife. c. What is the tax result to Roger if Rye redeems 55 shares for $600,000? Yolanda is Roger's wife.
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A, an individual (“A”) and X Corporation (“X”) each transferred property with a fair market value (“FMV”) of $100,000 and an adjusted basis of $20,000 to newly formed C Corporation (“C”) in exchange for 10 shares of C Corporation stock. These are the only shares of C outstanding. Assuming the transfers are related: a. What income, gain or loss, if any does A recognize in this transaction? b. If C’s current E&P during the year were $30,000, and C distributed $40,000 cash to each of X, and A, during the year, what is X’ taxable income (assuming the distribution from C is X’ only transaction during the year)?
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