Need answers to all posted MCQ No need for explanations Only attempt if you will answer all posted questions 15 Jane received stock in Blue Jay Corporation (Blue Jay) and a Blue Jay corporate bond in exchange for all of her Janey Corporation stock The Blue Jay stock is worth $60,000 and the bond is worth $4,000 (principal amount of $3,000) The exchange is pursuant to a corporate reorganization of both corporations that qualifies as an A reorganization under Code Section 368(a)1(A) Jane paid $62,000 for the stock in Cardinal Corporation four years ago The Janey Corporation stock is worth $60,000 Jane recognizes gain on the transaction of a $0 b $2,000 c $3,000 d $3,600 e We do not have sufficient information 16 Jane received stock in Blue Jay Corporation (Blue Jay) and a Blue Jay corporate bond in exchange for all of her Janey Corporation stock The Blue Jay stock is worth $60,000 and the bond is worth $4,000 (principal amount of $3,000) The exchange is pursuant to a corporate reorganization of both corporations that qualifies as an A reorganization under Code Section 368(a)1(A) Jane paid $62,000 for the stock in Janey Corporation four years ago Janes basis in the Blue Jay stock is a $60,000 b $62,000 c $64,000 d $66,000 e We do not have sufficient information 17 Jane, one of the shareholders of Janey Corporation, receives stock in Blue Jay Corporation (Blue Jay) and $5,000 cash in exchange for her Janey Corporation stock The Blue Jay stock is worth $65,000 Jane paid $60,000 for the stock of Janey Corporation four years ago The Janey Corporation stock is worth $60,000 Jane recognizes gain on the transaction of a $0 because this qualifies as an A reorganization under Code Section 368(a)(1)(A) b $5,000 because this qualifies as an A reorganization under Code Section 368(a)(1)(A) c $10,000 because this does not qualify as a A reorganization or a B reorganization d We do not have sufficient information e None of the above is a correct statement 18 Pursuant to a transaction that qualified as a C reorganization, Razors, Inc acquired substantially all of the assets of Blades, Inc Alice received stock in Razors, Inc worth $8,500 plus cash of $1,000 in exchange for her 1,000 shares in Blades, Inc , in which Alice had a basis of $11,000 and which had a fair market value of $9,000 The earnings and profits of Blades, Inc were substantial Alice recognizes a dividend income of $1,000 b long term capital loss of $1,500 c long term capital gain of $1,000 d no gain or loss 19 B2B Corporation and B2C, Inc , plan to consolidate The plan must be approved by a neither their boards of directors nor their shareholders b their boards and their shareholders c their boards only d their shareholders only 20 As part of a transaction that qualified as a C reorganization, Blanket, Inc transferred property with a fair market value of $10,000,000 and a basis to Blanket, Inc of $7,000,000 and as a result of the transaction, the shareholders of Blanket, Inc received $8,000,000 worth of stock in Pillows, Inc and $2,000,000 in cash As a result of this transaction, Pillows, Inc recognizes a gain of $3,000,000 b no gain or loss c gain of $2,000,000 d none of the above 21 As part of a transaction that qualified as a C reorganization, Blanket, Inc transferred property with a fair market value of $10,000,000 and a basis to Blanket, Inc of $7,000,000 for $8,000,000 worth of stock in Pillows, Inc and $2,000,000 in cash The Pillows, Inc stock and the cash was immediately distributed to the Blanket, Inc shareholders and their stock in Blanket, Inc was cancelled As a result of this, Blanket, Inc recognizes a gain of $3,000,000 b no gain or loss c gain of $2,000,000 d None of the above 22 LMN Inc liquidated Pursuant to the plan of liquidation, one shareholder, Mel, who owned 30 percent of the stock of LMN Inc , received as a distribution in exchange for all of his stock in the corporation, inventory worth $90,000 that had a basis to the corporation of $70,000 How much gain was recognized by LMN Inc as a result of this liquidating distribution and what was the character of the gain a $0 gain b $20,000 capital gain c $20,000 ordinary income d $20,000 Section 1231 gain 23 Ben and John formed BCD Inc , a corporation, in 2015 Ben received 80 of the voting common stock, the only class of stock and John received the remaining 20 of the stock In 2016, Ben transferred additional property to BCD Inc The property had an adjusted basis to Ben of $40,000 and a fair market value of $50,000 on the date of the transfer On the same day, and in exchange for the property he transferred to BCD Inc , Ben received cash of $15,000 and additional stock worth $35,000 How much gain was recognized by Ben as a result of this transaction a 0 b $10,000 c $15,000 d $25,000 24 Sue transferred a building to her newly formed corporation, RSTU Inc The building had an adjusted basis to Sue of $75,000 and a fair market value of $150,000 on the date of the transfer The building was encumbered by a mortgage of $100,000, which RSTU Inc assumed On the same day, and in exchange for the building she transferred to RSTU Inc , Sue received 100 percent of RSTU Inc s only class of stock The fair market value of the stock at the date of transfer was $50,000 How much gain was recognized by Sue as a result of this transaction a 0 b $25,000 c $50,000 d $75,000

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 26, 2024

Need answers to all posted MCQ. No need for explanations. Only attempt if you will answer all posted questions. 15. Jane received stock in Blue

Need answers to all posted MCQ. No need for explanations. Only attempt if you will answer all posted questions.

15. Jane received stock in Blue Jay Corporation (Blue Jay) and a Blue Jay corporate bond in exchange for all of her Janey Corporation stock. The Blue Jay stock is worth $60,000 and the bond is worth $4,000 (principal amount of $3,000). The exchange is pursuant to a corporate reorganization of both corporations that qualifies as an A reorganization under Code Section 368(a)1(A). Jane paid $62,000 for the stock in Cardinal Corporation four years ago. The Janey Corporation stock is worth $60,000. Jane recognizes gain on the transaction of

a. $0.

b. $2,000.

c. $3,000.

d. $3,600.

e. We do not have sufficient information.

16. Jane received stock in Blue Jay Corporation (Blue Jay) and a Blue Jay corporate bond in exchange for all of her Janey Corporation stock. The Blue Jay stock is worth $60,000 and the bond is worth $4,000 (principal amount of $3,000). The exchange is pursuant to a corporate reorganization of both corporations that qualifies as an A reorganization under Code Section 368(a)1(A). Jane paid $62,000 for the stock in Janey Corporation four years ago. Janes basis in the Blue Jay stock is

a. $60,000.

b. $62,000.

c. $64,000.

d. $66,000.

e. We do not have sufficient information.

17. Jane, one of the shareholders of Janey Corporation, receives stock in Blue Jay Corporation (Blue Jay) and $5,000 cash in exchange for her Janey Corporation stock. The Blue Jay stock is worth $65,000. Jane paid $60,000 for the stock of Janey Corporation four years ago. The Janey Corporation stock is worth $60,000. Jane recognizes gain on the transaction of

a. $0 because this qualifies as an A reorganization under Code Section 368(a)(1)(A).

b. $5,000 because this qualifies as an A reorganization under Code Section 368(a)(1)(A).

c. $10,000 because this does not qualify as a A reorganization or a B reorganization.

d. We do not have sufficient information.

e. None of the above is a correct statement.

18. Pursuant to a transaction that qualified as a C reorganization, Razors, Inc. acquired substantially all of the assets of Blades, Inc. Alice received stock in Razors, Inc. worth $8,500 plus cash of $1,000 in exchange for her 1,000 shares in Blades, Inc., in which Alice had a basis of $11,000 and which had a fair market value of $9,000. The earnings and profits of Blades, Inc. were substantial. Alice recognizes

a. dividend income of $1,000.

b. long-term capital loss of $1,500.

c. long-term capital gain of $1,000.

d. no gain or loss.

19. B2B Corporation and B2C, Inc., plan to consolidate. The plan must be approved by

a.	neither their boards of directors nor their shareholders.
b.	their boards and their shareholders.
c.	their boards only.
d.	their shareholders only.

20. As part of a transaction that qualified as a C reorganization, Blanket, Inc. transferred property with a fair market value of $10,000,000 and a basis to Blanket, Inc. of $7,000,000 and as a result of the transaction, the shareholders of Blanket, Inc. received $8,000,000 worth of stock in Pillows, Inc. and $2,000,000 in cash. As a result of this transaction, Pillows, Inc. recognizes

a. gain of $3,000,000.

b. no gain or loss.

c. gain of $2,000,000.

d. none of the above.

21. As part of a transaction that qualified as a C reorganization, Blanket, Inc. transferred property with a fair market value of $10,000,000 and a basis to Blanket, Inc. of $7,000,000 for $8,000,000 worth of stock in Pillows, Inc. and $2,000,000 in cash. The Pillows, Inc. stock and the cash was immediately distributed to the Blanket, Inc. shareholders and their stock in Blanket, Inc. was cancelled. As a result of this, Blanket, Inc. recognizes

a. gain of $3,000,000.

b. no gain or loss.

c. gain of $2,000,000.

d. None of the above.

22. LMN Inc. liquidated. Pursuant to the plan of liquidation, one shareholder, Mel, who owned 30 percent of the stock of LMN Inc., received as a distribution in exchange for all of his stock in the corporation, inventory worth $90,000 that had a basis to the corporation of $70,000. How much gain was recognized by LMN Inc. as a result of this liquidating distribution and what was the character of the gain?

a. $0 gain.

b. $20,000 capital gain.

c. $20,000 ordinary income.

d. $20,000 Section 1231 gain.

23. Ben and John formed BCD Inc., a corporation, in 2015. Ben received 80% of the voting common stock, the only class of stock and John received the remaining 20% of the stock. In 2016, Ben transferred additional property to BCD Inc. The property had an adjusted basis to Ben of $40,000 and a fair market value of $50,000 on the date of the transfer. On the same day, and in exchange for the property he transferred to BCD Inc., Ben received cash of $15,000 and additional stock worth $35,000. How much gain was recognized by Ben as a result of this transaction?

a. 0.

b. $10,000.

c. $15,000.

d. $25,000.

24. Sue transferred a building to her newly formed corporation, RSTU Inc. The building had an adjusted basis to Sue of $75,000 and a fair market value of $150,000 on the date of the transfer. The building was encumbered by a mortgage of $100,000, which RSTU Inc. assumed. On the same day, and in exchange for the building she transferred to RSTU Inc., Sue received 100 percent of RSTU Inc.s only class of stock. The fair market value of the stock at the date of transfer was $50,000. How much gain was recognized by Sue as a result of this transaction?

a. 0.

b. $25,000.

c. $50,000.

d. $75,000.