Problem 6-53 (LO. 1, 2, 4) Dove Corporation (E & P of $800,000) has 1,000 shares of stock outstanding. The shares are owned as follows: Julia, 600 shares; Maxine (Julia's sister), 300 shares; and Janine (Julia's daughter), 100 shares. Dove Corporation owns land (basis of $300,000, fair market value of $260,000) that it purchased as an investment seven years ago. Dove distributes the land to Julia in exchange for all of her shares in the corporation. Julia had a basis of $275,000 in the shares. What are the tax consequences for both Dove Corporation and Julia?
Problem 6-53 (LO. 1, 2, 4) Dove Corporation (E & P of $800,000) has 1,000 shares of stock outstanding. The shares are owned as follows: Julia, 600 shares; Maxine (Julia's sister), 300 shares; and Janine (Julia's daughter), 100 shares. Dove Corporation owns land (basis of $300,000, fair market value of $260,000) that it purchased as an investment seven years ago. Dove distributes the land to Julia in exchange for all of her shares in the corporation. Julia had a basis of $275,000 in the shares. What are the tax consequences for both Dove Corporation and Julia?
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 23P
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Transcribed Image Text:Problem 6-53 (LO. 1, 2, 4)
Dove Corporation (E & P of $800,000) has 1,000 shares of stock outstanding. The shares are owned as follows: Julia,
600 shares; Maxine (Julia's sister), 300 shares; and Janine (Julia's daughter), 100 shares. Dove Corporation owns land
(basis of $300,000, fair market value of $260,000) that it purchased as an investment seven years ago. Dove
distributes the land to Julia in exchange for all of her shares in the corporation. Julia had a basis of $275,000 in the
shares.
What are the tax consequences for both Dove Corporation and Julia?
If an amount is zero, enter "0".
a. If the distribution is a qualifying stock redemption:
Dove Corporation has a $
realized loss
of which $
is recognized. Julia has a
realized
of which $
is recognized. Her basis in the land acquired
is $
b. If the distribution is a liquidating distribution:
Dove Corporation has a $
realized loss
of which $
is recognized. Julia has a
realized
of which $
is recognized. Her basis in the land acquired
is $
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