Missy owns all 100 shares of Sand Corporation stock having a $1.15 million FMV. Her basis in the stock is $450,000. Sand'sE&P balance is $700,000. Peter would like to purchase the stock but wants only the corporation's non-cash assets valued at $850,000. Peter is willing to pay $850,000 for these assets.
Missy owns all 100 shares of Sand Corporation stock having a $1.15 million FMV. Her basis in the stock is $450,000. Sand'sE&P balance is $700,000. Peter would like to purchase the stock but wants only the corporation's non-cash assets valued at $850,000. Peter is willing to pay $850,000 for these assets.
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 32P
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Transcribed Image Text:Missy owns all 100 shares of Sand
Corporation stock having a $1.15 million FMV.
Her basis in the stock is $450,000. Sand'sE&P
balance is $700,000. Peter would like to
purchase the stock but wants only the
corporation's non-cash assets valued at
$850,000. Peter is willing to pay $850,000 for
these assets.
How would your answer to Part a change (if
at all) if Sand first redeems 25 shares of Missy
's stock for $300,000 and then Peter
purchases the remaining 75 shares from Missy
for $850,000?
Missy will recognize
of
on her sale of 75 sharos of Sand Corporation stock to Peter.
She will recognize an additional of
Jon the redemption of her remaining shares by Sand.
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