CoalitionCoalition

Corporation is owned equally by

ReaganReagan

and

SethSeth.

ReaganReagan

and

SethSeth

purchased their stock several years ago and have adjusted bases for their

CoalitionCoalition

stock of

$ 12 comma 500$12,500

and

$ 29 comma 500$29,500,

respectively. Each shareholder receives two liquidating distributions. The first liquidating distribution, made in the current year, results in each shareholder receiving a one-half interest in a parcel of land that has a

$ 37 comma 000$37,000

FMV and an

$ 19 comma 000$19,000

adjusted basis to

CoalitionCoalition

Corporation. The second liquidating distribution, made in the next year, results in each shareholder receiving

$ 15 comma 000$15,000

in cash.

Requirements

a.	What are the amount and character of ReaganReagan and SethSeth's recognized gain or loss for the current year? For the next year?
b.	What is the basis of the land in ReaganReagan and SethSeth's hands?
c.	How would your answers to Parts a and b change if the land has a $ 7 comma 000$7,000 FMV instead of a $ 37 comma 000$37,000 FMV?

Requirement a. What are the amount and character of

ReaganReagan

and

SethSeth's

recognized gain or loss for the current year? For the next year?

Compute the gain or loss and select the character of the gain or loss for each shareholder for the current year, then, for the next year.

		Gain or loss recognized - Current year
	Shareholder	Amount	Character
	Reagan
	Seth

	Gain or loss recognized - Next year
	Amount	Character

Requirement b. What is the basis of the land in

ReaganReagan

and

SethSeth's

hands?

	Shareholder	Basis
	Reagan
	Seth

Requirement c. How would your answers to Parts a and b change if the land has a

$ 7 comma 000$7,000

FMV instead of a

$ 37 comma 000$37,000

FMV?

Compute the gain or loss and select the character of the gain or loss for each shareholder for the current year and then for the next year.

		Gain or loss recognized - Current year
	Shareholder	Amount	Character
	Reagan
	Seth

Gain or loss recognized - Next year
Amount	Character

What is the basis of the land in

ReaganReagan

and

SethSeth's

hands if the land has a

$ 7 comma 000$7,000

FMV instead of a

$ 37 comma 000$37,000

FMV?

	Shareholder	Basis
	Reagan
	Seth

Choose from any list or enter any number in the input fields and then continue to the next question.