n October 2010 Reese acquired 100%
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Ef 352.
Transcribed Image Text:In October 2010, Reese acquired 100% of Bass Corporation common stock by transferring property with an adjusted basis of $1,600,000 and fair market value of $4,900,000. Bass is a qualified
small business corporation. On April 1, 2022, Reese sells all of the Bass Corporation common stock for $17,000,000.
Read the requirements.
C
Requirement a. What is the amount of gain that may be excluded from Reese's gross income? (Enter a "0" if none of the gain may be excluded from the taxpayer's gross income.)
The amount of gain that may be excluded from Reese's gross income is
Requirement b. What would your answer be if the fair market value of the Bass stock were only $820,000 upon its issue? (Enter a "0" if none of the gain may be excluded from the taxpayer's gross
income.)
Under this condition, the amount of gain that may be excluded from Reese's gross income is
Requirement c. What would your answer be if the stock were sold after two years? (Enter a "0" if none of the gain may be excluded from the taxpayer's gross income.)
If the stock were sold after two years, the amount of gain that may be excluded from Reese's gross income is
Requirement d. Can Reese avoid recognizing gain by purchasing replacement stock?
O A. Yes. If Reese acquires $4,900,000 or more of qualified stock within six months no gain is recognized, providing the original stock was held for over five years.
O B. No. Reese must recognize gain on the sale of the Bass Corporation common stock because the sale exceeded $10,000,000.
O C. Yes. If Reese acquires $10,000,000 or more of qualified stock within 60 days no gain is recognized, providing the original stock was held for over five years.
O D. Yes. If Reese acquires $17,000,000 or more of qualified stock within 60 days no gain is recognized, providing the original stock was held for over six months.
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