Swift Corporation agreed to redeem some of the shares of two of its shareholders. It distributed land

Question:

Swift Corporation agreed to redeem some of the shares of two of its shareholders. It distributed land (basis $55,000 and fair market value $120,000) to Sam in exchange for part of his stock. Sam's basis in the redeemed stock was $25,000. Swift also distributed $240,000 cash to Allison in exchange for part of her stock. Allison's basis in the redeemed stock was $40,000. As a result of the redemption's, Sam's interest in the corporation declined from 20% to 15%, and Allison's interest declined from 70%. to 60%.
Determine the tax consequences to Swift, Sam, and Allison if Swift is:
a. A C corporation.
b.
An S corporation.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

South Western Federal Taxation 2018 Essentials Of Taxation Individuals And Business Entities

ISBN: 9781337386173

21st Edition

Authors: William A. Raabe, James C. Young, Annette Nellen, David M. Maloney

Question Posted: