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alOU L ILULIul 02 LILLE (9) Assuming Company A has $500 of both Current and Accumulated E&P, it cannot distribute a combination of property worth

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alOU L ILULIul 02 LILLE (9) Assuming Company A has $500 of both Current and Accumulated E&P, it cannot distribute a combination of property worth $250 and stock worth $100. a. True b. False (10) The owners of Company X are retiring and liquidating the company. Company X has a number of assets and plans on distributing assets to its shareholders. What is the tax impact to Company X? a. Company X will recognize a gain or loss on the sale of the asset in the amount of the sales price b. Company X will recognize a gain or loss on the sale of the asset in the amount of the original purchase price C. Company X will recognize a gain or loss on the sale of the asset in the amount of the difference of the sales price minus adjusted basis d. Company X will not recognize a gain or loss on the sale of the asset because it's considered a tax-free transaction (11) Same fact pattern as question 10, what is the result to the shareholders if Company X distributes the property to them? a. Shareholders will have to recognize a gain or loss if the FMV of the received assets exceeds the adjusted basis of the shareholder's stock. b. Shareholders will not have to recognize a gain or loss because it's a tax-free transaction. c. Shareholders will not have to recognize a gain or loss because it's just a return of original property. d. This transaction will be considered a "D" Reorganization and therefore, not taxable to the shareholders (12) Alyssa and Stefanie decide to start a limited partnership to open up their commercial bakery and both are going to contribute property and cash to the partnership. Alyssa contributes all of the kitchen machinery and gadgets and Stefanie contributes a warehouse. Both contribute cash in the amount of $50,000. Which of the following is true? a. Alyssa and Stefanie will both have to recognize a gain of $50,000 on the cash contributed. b. Alyssa and Stefanie will both have to recognize a gain on the adjusted basis of the property contributed. c. The partnership will have to recognize a gain on the FMV minus the adjusted basis of the property contributed and the amount of cash contributed. d. Alyssa, Stefanie, and the partnership will not have to recognize a gain the contribution of the assets and the $50,000

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