What are the tax consequence to the corporations of the following alternative li

Question

What are the tax consequence to the corporations of the following alternative liquidating distribution?

Lynch, inc distributes its assets to George and dill as tenants in common. George taking an undivided 4/5th in each parcel of real estate (green acre) (and 160,000 in cash),

and dill taking an undivided 1/5th in each parcel of land (and $40,000 in cash).

Green Arce was acquired four years ago, when its fair market value and basis were both $500,000, as a contribution by George in section 351 transaction in exchange for enough stock to increase his stock ownership from 40% to 80%

Determine the tax consequence to all parties

Explanation / Answer

The gains (or loss) in anamounts in equal to the difference between the fair market value (FMV) of the assets received (whether they are cash, other propertys, orboth) and the adjusted basis of the stock surrendered.

S.no. Tax Consequences under various Circumstance:

1 Particular Share Value Per Share Period

I. Purchased 200 $11,000.00 $55.00 5 Years

II. Purchased 100 $1,000.00 $10.00 3 Months

Total FMV 300 $12,000.00

III. Received -200 $6,000.00 ($30.00) 5 Years

Net 100

IV. Received 100 $9,000.00 $30.00

Loss ($3,000.00)

2 Particular Share Value Per Share Period

I. Purchased 100 $500.00 $5.00 5 Years

II. Purchased 200 $2,000.00 $10.00 3 Months

Total 300 $2,500.00

III. Received $1,800.00 2017

IV. Received $900.00 2018

Loss ($200.00)

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