oe whether stotement is true (A) or Jal transfer of assets by the target corpora
ID: 2601159 • Letter: O
Question
oe whether stotement is true (A) or Jal transfer of assets by the target corporation in a 1. A Type A reorganization deals with the merger 2. Share holders who receive only stock as a distribution as part of a corporate reorganization may still treat the amount received as capital gains. 3. Mario exchanges stock he owns in Magic Corporation for stock in plus a note payable having a fair market value of $100,000 (principle amount of $ is pursuant to a tax free reorganization of both corporations. Mario paid Corporation four years ago. The Imagination stock is worth $500,00o. Mario will recognize gain on the transaction in the amount of $85,000. 85,000). The exchange $220,000 for stock in Magic 4. The stock in Yellow Corporation is held equally by two sisters. One year before Yellow iquidates, the shareholders transfer building (basis of $150,000, fair market value of 100,000) to Yellow corporation in return for stock. In a current year liquidation, Yellow Corporation transfers the building now worth only $87,000 pro rata to the sisters. The amount of loss that Yellow can recognize is ($63,000) 5. Partners must generally treat the value of profits interests they receive in exchange for ervices as ordinary income. hin daht is considered to be aExplanation / Answer
1.
True, The target is liquidated, and all of the target's assets and liabilities are assumed by the acquirer.
2.
False, no gain or loss is recognized at the time of exchange and it is deffered till target shareholder sell the shares.
3.
False, Fair market value is $ 100000 and recognized gain is the lower of the realized gain and the amount of boot received, i.e. $ 100000.
4.
True, FMV at the time of sale - Purchase price = $ 63000 will be amount of loss.
5.
False, partners receiving profits interest don't typically recognize income at the time they receive the interest.
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