11. Unmarried individual Ivan is the sole shareholder of RusCorp. Ivan bought th
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11. Unmarried individual Ivan is the sole shareholder of RusCorp. Ivan bought the shares two years ago for $100. RusCorp’s sole asset is a piece of real estate with a basis to Rus of $110 and a fair market value of $200. Ivan’s basis in the Rus stock is $100 and Rus has an NOI of $550. Rus distributes the land in complete liquidations.
a) Will Rus pay any tax as a result of the distribution of the land to Ivan? Explain.
b) What is the amount and character of Ivan’s gain or loss?
c) What is Ivan’s basis and holding period in the real estate?
d) What happens to Rus’s NOL?
this is reorganizations and liquidations..?
IMG_5526.PNG - Photos - Le Share 3 & x ... en W See all photos Q P Add to a creation % Edit & Create v 0 0 11. Unmarried individual Ivan is the sole shareholder of RusCorp. Ivan bought the shares two years ago for $100. RusCorp's sole asset is a piece of real estate with a basis to Rus of $110 and a fair market value of $200. Ivan's basis in the Rus stock is $100 and Rus has an NOL of $500. Rus distributes the land in complete liquidation. a) Will Rus pay any tax as a result of the distribution of the land to Ivan? Explain. b) What is the amount and character of Ivan's gain or loss? 2010 -(0) c) What is Ivan's basis and holding period in the real estate? dur d) What happens to Rus's NOL? disSlue, On top 12:00 PM 0 0 0 0 2 O 1 Type here to search A x D 0 G 40 % 3/28/2018Explanation / Answer
1. Rus will pay capital gain tax as a result of distribution of land to Ivan.
FMV of land $ 200
Basis $110
Gain $90
The basis of land received by Ivan is FMV of Land, therefore Rus Corp recognize a capital gain of $90.
2. Amount and character of Ivan's gain or loss
Gain = FMV of land - Basis of stock
= $200 - $100
= $100
Asset received by Ivan is a capital asset, thus the character of gain is Capital gain.
3. Ivan's basis and holding period of real estate.
Ivan basis in Land is $200, FMV of land received on liquidation. Holding period of real estate will start from the day Ivan received it, as he recognize gain on it.
4. Rus NOL.
NOL die with the Corporation Liquidation. NOL does not pass to the shareholders. The corporation will report NOL in the final tax return after dissolution, and it will disolve with corporation.
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