Taxation of Reorganizations & Liquidations

Dividends - Multiple choice questions (make one selection)

1. On a nonliquidating distribution of depreciated property subject to debt, in terms of computing the shareholders dividend:
   1. The fair market value is the amount of the distribution to the shareholder
   2. The fair market value less the debt is the amount of the distribution to the shareholder
   3. The fair market value plus the debt is the amount of the distribution
   4. The amount of the distribution depends on the amount of earnings and profits
2. On a nonliquidating distribution of appreciated property subject to debt, the shareholders basis in the property would be:
   1. The fair market value of the distributed property
   2. The basis of the distributive property
   3. The fair market value minus the debt of the distributive property
   4. The basis minus the debt of the distributive property
3. On a nonliquidating distribution of appreciated property, the corporations earnings and profits would be:
   1. Increased by the fair market value of the distributed property
   2. Decreased by the basis of the distributed property
   3. Decreased by the gain and increased by the fair market value of the property
   4. Decreased by the fair market value and increased by the gain
4. On a nonliquidating distribution of depreciated property, the corporations earnings and profits would be:
   1. Decreased by the fair market value of the distributed property
   2. Decreased by the basis of the distributive property
   3. Decreased by the recognized loss and increased by the basis of the property
   4. Decreased by the recognized loss and increased by the fair market value of the property
5. On a nonliquidating distribution of depreciated property, subject to the debt, the corporations earnings and profits would be:
   1. Decreased by the basis of the property and increased by the amount of the debt
   2. Increased by the basis of the distributed property and decreased by the amount of the debt
   3. Decreased by the unrecognized loss increased by the amount of the debt
   4. Increased by the fair market value of the property
6. On a nonliquidating distribution of a corporations own obligations the corporation would:
   1. Not recognize gain or loss and decrease earnings and profits by the principal amount of the obligations
   2. Recognize gain or loss and decrease earnings and profits by the principal amount of the obligations
   3. Recognize gain only and decrease earnings and profits by the principal amount of the obligations
   4. Not recognize gain or loss and decrease earnings and profits by the fair market value of the obligations
7. On a nonliquidating distribution of appreciated property, the shareholder will realize a return of basis when:
   1. The fair market value of the distributed property is a dividend covered by the corporation's earnings and profits
   2. The basis of the distributed property is a dividend covered by the corporations earnings and profits
   3. The fair market value of the distributed property exceeds the corporation's earnings and profits
   4. The basis of the distributed property exceeds the corporations earnings and profits
8. On a nonliquidating distribution of depreciated property, the shareholder will realize a return of basis when:
   1. The fair market value of the distributed property is a dividend covered by the corporation's earnings and profits
   2. The basis of the distributed property is a dividend covered by the corporations earnings and profits
   3. The fair market value of the distributed property exceeds the corporation's earnings and profits
   4. The basis of the distributed property exceeds the corporations earnings and profits
9. Corporations wishing to recognize loss on a nonliquidating distribution of depreciated property should:
   1. Sell the property to a shareholder who owns more than 50% of the company stock
   2. Distribute the property to a shareholder in respect of its stock
   3. Distribute the property subject to a mortgage
   4. Sell the property to a third party who resells it to a shareholder in an unrelated transaction