"A" owns 100 shares of Humdrum Corporation which he purchased several years ago for $10,000. What are the tax consequences to A on the liquidation of Humdrum Corporation in the following alternative situations: (a) Humdrum distributes $20,000 to A in exchange for his stock? (b) What result in (a), above, in A receives $10,000 in the current year (year one) and $10,000 in year two? Would there be any problem if Humdrum does not adopt a formal plan of complete liquidation in year one?
"A" owns 100 shares of Humdrum Corporation which he purchased several years ago for $10,000. What are the tax consequences to A on the liquidation of Humdrum Corporation in the following alternative situations: (a) Humdrum distributes $20,000 to A in exchange for his stock? (b) What result in (a), above, in A receives $10,000 in the current year (year one) and $10,000 in year two? Would there be any problem if Humdrum does not adopt a formal plan of complete liquidation in year one?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 56P
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Question
"A" owns 100 shares of Humdrum Corporation which he purchased several years ago for $10,000. What are the tax consequences to A on the liquidation of Humdrum Corporation in the following alternative situations:
(a) Humdrum distributes $20,000 to A in exchange for his stock?
(b) What result in (a), above, in A receives $10,000 in the current year (year one) and $10,000 in year two? Would there be any problem if Humdrum does not adopt a formal plan of complete liquidation in year one?
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Given that:
Cost of 100 shares = $10,000
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT