IN ALL EXAMPLES ASSUME THE CORPORATE TAX RATE IS 34% AND THE SHAREHOLDERS CAPITAL GAIN RATE IS 20%

PROBLEM 3: Target Corporation has assets with a FMV of $12,000,000 and a tax basis of $8,000,000. Target has one shareholder, Tony, and Tonys basis in his Target stock is $6 Million. Acquiring Corporation will acquire the stock of Target Corporation for $11 Million cash.

Target Realized Gain or Loss __________________

Target Recognized Gain or Loss __________________

Tony Realized Gain or Loss __________________

Tony Recognized Gain or Loss __________________

Acquiring Corporation Basis in Target Assets __________________

Tony Basis in Acquiring Stock __________________

What happens to Target tax attributes? __________________

Form 8594 Required? __________________