Madison owns 100% of Omega Corporation's common stock. View the balance sheet.LOADING... The following are the tax consquequences for Omega and Madison if we assume that on January 2 of the current year, Omega liquidated and distributed all property to Madison except that Omega retained cash to pay the accounts payable and any tax liability resulting from Omega's liquidation. These results also assume that Omega had no other taxable income or loss and a 21% corporate tax rate Assume the same facts as in this problem except, on January 2 of the current year, Omega Corporation sells all property other than cash to Aggregate Corporation for FMV. Omega pays off the accounts payable and retains cash to pay any tax liability resulting from Omega's liquidation. Omega then liquidates and distributes all remaining cash to Madison. Assume that Omega has no other taxable income or loss. Determine the tax consequences to Omega, Aggregate, and Madison. How do these results compare to those originally presented in the problem?

Omega is an accrual basis, calendar year corporation. Madison formed the corporation six years ago by transferring $225,000 of cash in exchange for the Omega stock. Thus, she has held the stock for six years and has a $225,000 adjusted basis in the stock. Omega's balance sheet at January 1 of the current year is as follows: Omega has held the marketable securities for two years. In addition, Omega has claimed $75,000 of MACRS depreciation on the machinery and $120,000 of straight-line depreciation on the building. Tax Consequences for Madison Tax consequences for Madison assuming that on January 2 of the current year Omega liquidates. After retaining cash to pay the accounts payable and tax liability resulting from the liquidation, all property is distributed to Madison. Madison recognizes gain under Sec. 331(a) as follows: Madison takes the following FMV bases under Sec. 334(a) : Tax Consequences for Omega Tax consequences for Omega assuming that on January 2 of the current year Omega liquidates. After retaining cash to pay the accounts payable and tax liability resulting from the liquidation, all property is distributed to Madison. Omega recognizes gain under Sec. 336( a) as follows