When you see this question please finish it in 1 hour and leave your p@yp@l account in the answer as well, I know it's a long problem so I would like to show my appreciation by sending some funds$ to you if you answer this correctly and thoroughly thank you.
The managing partner's client, Summit Pictures Inc. (Summit) acquired 20% of Twilight Inc. (Twilight) for $40,000 many moons ago. This 20% (40 shares) in Summit's hands is now old and cold stock. In a recent qualified stock purchase, Summit acquired the remaining 80% (160 shares) for $400,000, said stock basis to Twilight shareholders of $80,000. As of the QSP date, Twilight owns an asset with a basis of $200,000 and a fair market value of $500,000. A) If Summit does not make an IRC Sec. 338 election, what will be the tax consequences to Summit (basis in Twilight stocks), Twilight (adjusted basis in its assets), and Twilight shareholders (gain or loss to recognize)? (3 points) B) If Summit liquidates Twilight, will either corporation recognize gain or loss? What will be the asset basis in the hands of Twilight Inc.? Please provide code section(s) that justify your answer. (3 points) Page 10 of 11 C) What if Summit does make an IRC Sec. 338 election? What will be the gain to recognize by Twilight, and Twilight's basis in the asset post-election? (2 points) D) What if the 20% (40 shares) was not old and cold stock, but was owned by other unrelated shareholders, and Summit makes an IRC Sec. 338 election, what will be the consequences to Twilight, i.e., any gain to recognize and basis in the asset? (2 points) The managing partner's client, Summit Pictures Inc. (Summit) acquired 20% of Twilight Inc. (Twilight) for $40,000 many moons ago. This 20% (40 shares) in Summit's hands is now old and cold stock. In a recent qualified stock purchase, Summit acquired the remaining 80% (160 shares) for $400,000, said stock basis to Twilight shareholders of $80,000. As of the QSP date, Twilight owns an asset with a basis of $200,000 and a fair market value of $500,000. A) If Summit does not make an IRC Sec. 338 election, what will be the tax consequences to Summit (basis in Twilight stocks), Twilight (adjusted basis in its assets), and Twilight shareholders (gain or loss to recognize)? (3 points) B) If Summit liquidates Twilight, will either corporation recognize gain or loss? What will be the asset basis in the hands of Twilight Inc.? Please provide code section(s) that justify your answer. (3 points) Page 10 of 11 C) What if Summit does make an IRC Sec. 338 election? What will be the gain to recognize by Twilight, and Twilight's basis in the asset post-election? (2 points) D) What if the 20% (40 shares) was not old and cold stock, but was owned by other unrelated shareholders, and Summit makes an IRC Sec. 338 election, what will be the consequences to Twilight, i.e., any gain to recognize and basis in the asset? (2 points)
