Question
Myron Corporation acquired 10,000 shares of BP Corporation stock for $10 per share in 2010. BB Corp. redeemed 1,000 shares from Myron Corp. for $20,000
Myron Corporation acquired 10,000 shares of BP Corporation stock for $10 per share in 2010. BB Corp. redeemed 1,000 shares from Myron Corp. for $20,000 in 2016. Myron Corp. is a more than 80% owner of BP both before and after the transaction. Myron's MTR in 2016 is 34%.
(a) What is Myron's tax liability from this transaction if it qualifies for a sale or exchange treatment?
(b) What is Myron's tax liability from this transaction if it qualifies for a dividend treatment?
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
13th Edition
9780470374948, 470423684, 470374942, 978-0470423684
