Topic 10 Liquidations Flashcards
1
Q
Tax Consequences
- corporate acquires ___ stock from ___ shareholders in exchange for “___” of its net assets
- corporation ______ to do business
- file form ___ to inform IRS of intent to liquidate within __ days after owners resolve to liquidate
A
all; all; all
ceases
966; 30
2
Q
Liquidation
- fully _______ to non corporate shareholders
- –treat property received as “___ ______” in exchange for stock
- –gain/loss = difference between ____ ______ and ___ __ ______ ____:
- —–debt assumed by shareholder reduces ___ of property received
- —–FMV cannot be less than the ___ assumed by shareholder
- –tax basis equal property’s ___
-if corporate shareholder own __% or more of stock - no gain/loss recognized and ________ tax basis
A
taxable
full payment
stock basis; FMV of property received
FMV
debt
FMV
80%; carryover
3
Q
Taxable Liquidating Distributions
-Liquidating corp recognizes ___ gains and _______ losses on taxable distribution of property
- does not recognize loss if:
- –distributed to a ______ party
- –distribution in ___-___ ____
- –asset distributed is _________ property:
- —–acquired within _ years of date of distribution in tax deferred §351 transaction or as nontaxable contribution of capital
- –property distributed was acquired in §___ transaction or as __________ of _______, and the principal purpose was to recognize a loss by liquidating corporation
- —–prevents ____-__ loss at time of distribution from being recognized by treating basis at the FMV at time of contribution
A
all; certain
related non-pro rata disqualified 5 §351; contribution of capital built-in
4
Q
Nontaxable Liquidating Distributions
- liquidating corporation (does/does not) recognize gain/loss on tax-free distributions of property to an __% corporate shareholder (parent/sub)
- liquidation expenses are deductible on final Form ____
- deferred or capitalized expenditures are deductible on _____ tax return
A
does not; 80%
1120
final
