Question
Answer true or false to the following: Merchant Corporation owned 100% of Craft Corporation since 2000. Merchant Corporations basis in their Craft stock was $200,000.
Answer true or false to the following:
Merchant Corporation owned 100% of Craft Corporation since 2000. Merchant Corporations basis in their Craft stock was $200,000. Merchant Corporation had an NOL of $60,000 and E&P of $20,000. Craft Corporation looks as follows on August 1, 2021.
Cost Basis FMV___
Machinery $50,000 $40,000 $45,000
Building $100,000 $90,000 $180,000
Inventory $100,000 $100,000 $200,000
Total $250,000 $230,000 $425,000
Merchant Corporation decides to liquidate Craft Corporation in 2021.
Merchant would have to recognize a gain of $225,000.
Answer true or false to the following:
Merchant Corporation owned 100% of Craft Corporation since 2000. Merchant Corporations basis in their Craft stock was $200,000. Merchant Corporation had an NOL of $60,000 and E&P of $20,000. Craft Corporation looks as follows on August 1, 2021.
Cost Basis FMV___
Machinery $50,000 $40,000 $45,000
Building $100,000 $90,000 $180,000
Inventory $100,000 $100,000 $200,000
Total $250,000 $230,000 $425,000
Merchant Corporation decides to liquidate Craft Corporation in 2021.
Merchant would only recognize the gain to the extent of depreciation recapture.
Merchant Corporation owned 100% of Craft Corporation since 2000. Merchant Corporations basis in their Craft stock was $200,000. Merchant Corporation had an NOL of $60,000 and E&P of $20,000. Craft Corporation looks as follows on August 1, 2021.
Cost Basis FMV___
Machinery $50,000 $40,000 $45,000
Building $100,000 $90,000 $180,000
Inventory $100,000 $100,000 $200,000
Total $250,000 $230,000 $425,000
Merchant Corporation decides to liquidate Craft Corporation in 2021.
Craft Corporations NOL would be preserved and pass on to Merchant.
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