Several years ago, Tampa Corporation acquired 100% of Union Corporation stock for $1,000,000. In the current year,

Question:

Several years ago, Tampa Corporation acquired 100% of Union Corporation stock for $1,000,000. In the current year, Tampa liquidates Union and receives all of its assets and liabilities. Tampa continues to operate Union as a division. On the liquidation date, the basis and FMV of Union’s assets are $700,000 and $2,500,000, respectively. Union also has $100,000 of liabilities that were owed to third parties and E&P of $125,000 on the liquidation date.
a. How much gain or loss does Union recognize as a result of the liquidation?
b. What is Tampa’s basis in the Union assets?
c. What Union tax attributes (if any) carry over to Tampa?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....

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