Glen Corporation is owned 80% by Zora Corporation and 20% by Rian Gibb, a Glen employee. A preliquidation balance sheet for Glen is presented below: (Click the icon to view the balance sheet.) (Click the icon to view additional information.) Requirement What are the tax consequences of the liquidation to Rian Gibb, Zora Corporation, and Glen Corporation? ... What are the tax consequences of the liquidation to Glen Corporation? Begin by computing the gain or loss recognized for each asset for Glen Corporation. (Complete all input fields. Enter a "0" for amounts with a zero value. Use parentheses or minus sign for a loss. Do not round intermediary calculations.) Gain or loss recognized Inventory Equipment Land - Total Data table Assets Basis FMV Cash 300,000 300,000 270,000 700.000 Inventory Equipment Land 130,000 200,000 280.000 340.000 $ 1,040,000 $ 1,480,000 Total More info Liabilities & Equity $ 130,000 $ 130.000 Accounts payable Bonds payable to Zora Common stock 350.000 Glen has claimed $200,000 of MACRS depreciation on the equipment. Glen purchased the land three years ago as a potential plant site. Plans to build the plant never were consummated, and Glen has held the land since then as an investment. Zora and Rian Gibb have $368,000 and 592,000 bases, respectively, in their Glen stock. Both shareholders have held their stock since the corporation's inception ten years ago. Glen adopts a plan of liquidation. Glen transfers $350,000 of inventory to Zora to retire the bonds. The shareholders receive their share of Glen's remaining assets and assume their share of Glen's liabilities (other than federal income taxes). Glen pays federal income taxes owed on the liquidation. Assume a 21% corporate tax rate. 350,000 460,000 100,000 1,000,000 Retained earnings (and E&P) Total $ 1,040,000 $ 1.480,000 Print Done Print Done Glen Corporation is owned 80% by Zora Corporation and 20% by Rian Gibb, a Glen employee. A preliquidation balance sheet for Glen is presented below: (Click the icon to view the balance sheet.) (Click the icon to view additional information.) Requirement What are the tax consequences of the liquidation to Rian Gibb, Zora Corporation, and Glen Corporation? ... What are the tax consequences of the liquidation to Glen Corporation? Begin by computing the gain or loss recognized for each asset for Glen Corporation. (Complete all input fields. Enter a "0" for amounts with a zero value. Use parentheses or minus sign for a loss. Do not round intermediary calculations.) Gain or loss recognized Inventory Equipment Land - Total Data table Assets Basis FMV Cash 300,000 300,000 270,000 700.000 Inventory Equipment Land 130,000 200,000 280.000 340.000 $ 1,040,000 $ 1,480,000 Total More info Liabilities & Equity $ 130,000 $ 130.000 Accounts payable Bonds payable to Zora Common stock 350.000 Glen has claimed $200,000 of MACRS depreciation on the equipment. Glen purchased the land three years ago as a potential plant site. Plans to build the plant never were consummated, and Glen has held the land since then as an investment. Zora and Rian Gibb have $368,000 and 592,000 bases, respectively, in their Glen stock. Both shareholders have held their stock since the corporation's inception ten years ago. Glen adopts a plan of liquidation. Glen transfers $350,000 of inventory to Zora to retire the bonds. The shareholders receive their share of Glen's remaining assets and assume their share of Glen's liabilities (other than federal income taxes). Glen pays federal income taxes owed on the liquidation. Assume a 21% corporate tax rate. 350,000 460,000 100,000 1,000,000 Retained earnings (and E&P) Total $ 1,040,000 $ 1.480,000 Print Done Print Done
