Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Barb owns all 100 shares of Branch Corporation stock having a 50.55 million FMV. Her basis in the stock is $320,000. Branch's E&P balance is

image text in transcribed

Barb owns all 100 shares of Branch Corporation stock having a 50.55 million FMV. Her basis in the stock is $320,000. Branch's E&P balance is $230,000. Tom would like to purchase the stock but wants only the corporation's non-cash assets valued at $450,000. Tom is willing to pay $450,000 for these assets. Read the requirements ... Requirement a. What are the tax consequences to Barb, Tom, and Branch if Tom purchases 75 shares of Branch stock for $450,000 and Branch redeems Barb's remaining 25 shares for $100,000 cash? Barb will recognize 150000 of capital gain on her sale of 75 shares of Branch Corporation stock to Tom. She will recognize an additional 100000 of capital gain on the redemption of her remaining shares by Branch Requirements a. What are the tax consequences to Barb, Tom, and Branch if Tom purchases 75 shares of Branch stock for $450,000 and Branch redeems Barb's remaining 25 shares for $100,000 cash? b. How would your answer to Part a change (if at all) if Branch first redeems 25 shares of Barb's stock for $100.000 and then Tom purchases the remaining 75 shares from Barb for $450,000? Clear all Check answer Barb owns all 100 shares of Branch Corporation stock having a 50.55 million FMV. Her basis in the stock is $320,000. Branch's E&P balance is $230,000. Tom would like to purchase the stock but wants only the corporation's non-cash assets valued at $450,000. Tom is willing to pay $450,000 for these assets. Read the requirements ... Requirement a. What are the tax consequences to Barb, Tom, and Branch if Tom purchases 75 shares of Branch stock for $450,000 and Branch redeems Barb's remaining 25 shares for $100,000 cash? Barb will recognize 150000 of capital gain on her sale of 75 shares of Branch Corporation stock to Tom. She will recognize an additional 100000 of capital gain on the redemption of her remaining shares by Branch Requirements a. What are the tax consequences to Barb, Tom, and Branch if Tom purchases 75 shares of Branch stock for $450,000 and Branch redeems Barb's remaining 25 shares for $100,000 cash? b. How would your answer to Part a change (if at all) if Branch first redeems 25 shares of Barb's stock for $100.000 and then Tom purchases the remaining 75 shares from Barb for $450,000? Clear all Check

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Practical Guide To Commercial And Industrial Energy Auditing

Authors: Mtijan M Kamara

1st Edition

1717257321, 978-1717257321

More Books

Students also viewed these Accounting questions