Bruno, an individual, is the sole shareholder of Green Corporation. On January 1, 2019, Bruno decided to liquidate Green Corporation. At the date of liquidation, Green Corporation had assets with a FMV of $2,500,000 and a basis of $1,800,000. Green Corporation’s earnings and profits at the date of liquidation were $2,000,000. Bruno’s basis in Green Corporation stock is $900,000. 1. What tax impact does the liquidation have on Green Corporation? 2. What tax impact does the liquidation have on Bruno (Assume tax rate of 23.8%) 3. How would your answer change if Bruno was a C-Corporation instead of an individual?
Bruno, an individual, is the sole shareholder of Green Corporation. On January 1, 2019, Bruno decided to liquidate Green Corporation. At the date of liquidation, Green Corporation had assets with a FMV of $2,500,000 and a basis of $1,800,000. Green Corporation’s earnings and profits at the date of liquidation were $2,000,000. Bruno’s basis in Green Corporation stock is $900,000. 1. What tax impact does the liquidation have on Green Corporation? 2. What tax impact does the liquidation have on Bruno (Assume tax rate of 23.8%) 3. How would your answer change if Bruno was a C-Corporation instead of an individual?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter15: S Corporations
Section: Chapter Questions
Problem 2CE
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Bruno, an individual, is the sole shareholder of Green Corporation. On January 1, 2019, Bruno decided to liquidate Green Corporation. At the date of liquidation, Green Corporation had assets with a FMV of $2,500,000 and a basis of $1,800,000. Green Corporation’s earnings and profits at the date of liquidation were $2,000,000. Bruno’s basis in Green Corporation stock is $900,000.
1. What tax impact does the liquidation have on Green Corporation?
2. What tax impact does the liquidation have on Bruno (Assume tax rate of 23.8%)
3. How would your answer change if Bruno was a C-Corporation instead of an individual?
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