Tax Accounting Review

11) Mars Corporation merges into Jupiter Corporation by exchanging all of its assets for 300,000 shares of Jupiter stock valued at $5 per share and $200,000 cash. Wanda, the sole shareholder of Mars, surrenders her Mars stock (basis $800,000) and receives all of the Jupiter stock transferred to Mars plus the $200,000. How does Wanda treat this transaction on her tax return? A) Wanda recognizes NO gain. Her Jupiter stock basis is $800,000. B) Wanda recognizes no gain. Her Jupiter stock basis is $600,000. C) Wanda recognizes a $900,000 gain and the basis for Jupiter stock basis is $1,500,000. D) Wanda recognizes a $200,000 gain and the basis for Jupiter stock basis is $800,000. 12) Robin Corporation, a calendar year taxpayer, has a deficit in current E & P of $300,000 and a $400,000 positive balance in accumulated E & P. Robin made a distribution of $200,000 to its shareholders on July 15 of the year. How much taxable dividend income did the shareholders have as a result of this distribution? A) $200.000 B $100,000 C) $150,000 $250.000