Barb owns all 100 shares of Branch Corporation stock having a $0.55 million FMV. Her basis in the stock is $320,000. Branch's E&P balance is $230,000. Tom would like to purchase the stock but wants only the corporation's non-cash assets valued at $450,000. Tom is willing to pay $450,000 for these assets. Read the requirements Requirement a. What are the tax consequences to Barb, Tom, and Branch if Tom purchases 75 shares of Branch stock for $450,000 and Branch redeems Barb's remaining 25 shares for $100,000 cash? Barb will recognize on her sale of 75 shares of Branch Corporation stock to Tom. She will recognize an additional of on the redemption of her remaining shares by Branch.

Barb owns all 100 shares of Branch Corporation stock having a $0.55 million FMV. Her basis in the stock is $320,000. Branch's E&P balance is $230,000. Tom would like to purchase the stock but wants only the corporation's non-cash assets valued at $450,000. Tom is willing to pay $450,000 for these assets. Read the requirements Requirement a. What are the tax consequences to Barb, Tom, and Branch if Tom purchases 75 shares of Branch stock for $450,000 and Branch redeems Barb's remaining 25 shares for $100,000 cash? Barb will recognize on her sale of 75 shares of Branch Corporation stock to Tom. She will recognize an additional of on the redemption of her remaining shares by Branch.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 31P

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