Robert owns 60 of 100 shares Ying Corporation’s stock and 80 of 100 shares of Yang Corp. stock. Robert’s basis in his Ying shares is $24,000 and his basis in his Yang shares is $16,000. Robert sells 30 of his Ying shares to Yang Corporation for $80,000. At the end of the year of the sale, Ying and Yang have E&P of $35,000 and $60,000 respectively. a. How will the sale of the stock be treated for tax purposes? sale or dividend? Why? b. What is Robert’s basis in his shares of Ying and Yang after the sale? c. How does the sale effect the E&P of Ying and Yang Corporation? d. How would the result differ if he sold 55 of his Ying shares to Yang Corporation? Why?
Robert owns 60 of 100 shares Ying Corporation’s stock and 80 of 100 shares of Yang Corp. stock. Robert’s basis in his Ying shares is $24,000 and his basis in his Yang shares is $16,000. Robert sells 30 of his Ying shares to Yang Corporation for $80,000. At the end of the year of the sale, Ying and Yang have E&P of $35,000 and $60,000 respectively. a. How will the sale of the stock be treated for tax purposes? sale or dividend? Why? b. What is Robert’s basis in his shares of Ying and Yang after the sale? c. How does the sale effect the E&P of Ying and Yang Corporation? d. How would the result differ if he sold 55 of his Ying shares to Yang Corporation? Why?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 27P
Related questions
Question
Kk.280.
Robert owns 60 of 100 shares Ying Corporation’s stock and 80 of 100 shares of Yang Corp.
stock. Robert’s basis in his Ying shares is $24,000 and his basis in his Yang shares is
$16,000. Robert sells 30 of his Ying shares to Yang Corporation for $80,000. At the end of the
year of the sale, Ying and Yang have E&P of $35,000 and $60,000 respectively.
a. How will the sale of the stock be treated for tax purposes? sale or dividend? Why?
b. What is Robert’s basis in his shares of Ying and Yang after the sale?
c. How does the sale effect the E&P of Ying and Yang Corporation?
d. How would the result differ if he sold 55 of his Ying shares to Yang Corporation? Why?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT