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 Таx Basis Appreciation (Depreciation) FMV $ 275,500 73,000 202,500 $ 275,500 25,250 255,000 $ 555,750 Cash Building Land 47,750 (52,500) $ (4,750) $ 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.) Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive $220,400 in the liquidation and Carlos will receive the land and building plus $55,100. h. 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 Таx Basis Appreciation (Depreciation) FMV $ 275,500 73,000 202,500 $ 275,500 25,250 255,000 $ 555,750 Cash Building Land 47,750 (52,500) $ (4,750) $ 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.) Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive $220,400 in the liquidation and Carlos will receive the land and building plus $55,100. h. 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
Таx Basis
$ 275,500
25,250
Appreciation
(Depreciation)
FMV
Cash
$ 275,500
Building
73,000
47,750
202,500
$ 551,000
255,000
$ 555,750
(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.)
Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive $220,400 in the liquidation and
Carlos will receive the land and building plus $55,100.
h. What is Carlos's adjusted tax basis in the building and land after the complete liquidation?
Building
Land
Tax basis
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