McIlroy has two shareholders, Kelsey and Katie. They purchased their stock in McIlroy ten years ago at a cost of $25,000 each. McIlroy has manufactured golf equipment and soccer equipment for the past ten years. In the current year, McIlroy transfers all the assets used to manufacture golf equipment to Koepka Corporation for all the stock in Koepka. The assets transferred to Koepka have a fair market value of $300,000 and a basis of $100,000. The stock in Koepka is also worth $300,000. McIlroy then exchanges all the stock in Koepka for all of Kelseys stock in McIlroy.

1. Does this transaction satisfy the requirements for a Type D reorganization?

In your answer, discuss the requirements for a Type D reorganization and whether they are satisfied in this case.

2. Without prejudice to your answer in Part (1), assume the transaction qualifies as a Type D reorganization. How much gain do McIlroy, Koepka, and Kelsey recognize?
3. What is Koepka basis in the assets transferred to it by McIlroy?
4. What is Kelseys basis in her Koepka stock?

Carlys gross estate includes 1,500 shares of stock of Macon Corporation (basis to Carly of $1,200,000, fair market value on date of death of $8,250,000). The estate will incur $5,500,000 in death taxes and funeral and administration expenses, and the adjusted gross estate is $22,000,000. Joni, Carlys daughter and sole heir of her estate, owns the remaining 500 shares of Macon Corporations shares outstanding. In the current year, Macon (E&P of $10,000,000) redeems all the estates 1,500 shares for $8,250,000.

1. Does Macons redemption of the estates stock qualify as a redemption to pay death taxes under 303? Explain and show supporting computations.
2. How much of the redemption qualifies under 303?
3. Can the rest of the proceeds be treated as received from the sale of stock under one of the other qualifying redemptions (not essentially equivalent to a dividend, substantially disproportionate, or complete termination)? Explain why or why not and show computations to support your answer.
4. Without prejudice to your answer in Part (3), assume that the rest of the proceeds cannot be treated as a sale of the stock under one of the other qualifying redemptions. What are the amounts and character of the income the estate must recognize?

Rogers Corporation acquired land in a 351 exchange in November 2017. The land had a basis of $500,000 and a fair market value of $550,000 on the date of the transfer. Rogers Corporation has two equal shareholders (i.e., each owns 50%), Chris and Mindy, who are father and daughter. Rogers adopts a plan of liquidation in March 2019. At the time the plan was adopted, the land had decreased in value to $400,000.

Required: Determine the dollar amount of loss that Rogers Corporation may recognize in each of the independent situations below.

1. Rogers Corporation distributes the land pro rata to Chris and Mindy.
2. Rogers Corporation sells the land for $400,000 and distributes the proceeds to Chris and Mindy.
3. Assume the same facts as stated above, except that the land had a basis of $500,000 and a fair market value of $450,000 in November 2017 when it was acquired in the 351 transaction. If Rogers Corporation were to sell the land and distribute the proceeds to Chris and Mindy, what amount of loss may Rogers recognize?