Tiffany and Carlos decided to liquidate their jointly owned corporation, Royal Oak Furniture (ROF). After liquidating its remaining inventory and paying off its remaining liabilities, ROF had the following tax accounting balance sheet: Adjusted Appreciation (Depreciation) FMV Таx Basis $ 275,500 73,000 202,500 $ 551,000 $ 275,500 25,250 Cash Building 255,000 $ 555,750 47,750 (52,500) $ (4,750) Land Total Under the terms of the agreement, Tiffany will receive the $275,500 cash in exchange for her 50 percent interest in ROF. Tiffany's tax basis in her ROF stock is $56,500. Carlos will receive the building and land in exchange for his 50 percent interest in ROF. His tax basis in the ROF stock is $133,500. Assume for purposes of this problem that the cash available to distribute to the shareholders has been reduced by any tax paid by the corporation on gain recognized as a result of the liquidation. (Negative amounts should be indicated by a minus sign.) d. What is Carlos's adjusted tax basis in the building and land after the complete liquidation? Building Land Tax basis
Tiffany and Carlos decided to liquidate their jointly owned corporation, Royal Oak Furniture (ROF). After liquidating its remaining inventory and paying off its remaining liabilities, ROF had the following tax accounting balance sheet: Adjusted Appreciation (Depreciation) FMV Таx Basis $ 275,500 73,000 202,500 $ 551,000 $ 275,500 25,250 Cash Building 255,000 $ 555,750 47,750 (52,500) $ (4,750) Land Total Under the terms of the agreement, Tiffany will receive the $275,500 cash in exchange for her 50 percent interest in ROF. Tiffany's tax basis in her ROF stock is $56,500. Carlos will receive the building and land in exchange for his 50 percent interest in ROF. His tax basis in the ROF stock is $133,500. Assume for purposes of this problem that the cash available to distribute to the shareholders has been reduced by any tax paid by the corporation on gain recognized as a result of the liquidation. (Negative amounts should be indicated by a minus sign.) d. What is Carlos's adjusted tax basis in the building and land after the complete liquidation? Building Land Tax basis
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 25P
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Transcribed Image Text:Tiffany and Carlos decided to liquidate their jointly owned corporation, Royal Oak Furniture (ROF). After liquidating its
remaining inventory and paying off its remaining liabilities, ROF had the following tax accounting balance sheet:
Adjusted
Appreciation
(Depreciation)
FMV
Таx Basis
$ 275,500
73,000
$ 275,500
25,250
Cash
Building
47,750
255,000
$ 555,750
(52,500)
$ (4,750)
Land
202,500
$ 551,000
Total
Under the terms of the agreement, Tiffany will receive the $275,500 cash in exchange for her 50 percent interest in ROF.
Tiffany's tax basis in her ROF stock is $56,500. Carlos will receive the building and land in exchange for his 50 percent
interest in ROF. His tax basis in the ROF stock is $133,500. Assume for purposes of this problem that the cash available to
distribute to the shareholders has been reduced by any tax paid by the corporation on gain recognized as a result of the
liquidation. (Negative amounts should be indicated by a minus sign.)
d. What is Carlos's adjusted tax basis in the building and land after the complete liquidation?
Building
Land
Tax basis
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