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8 Nov 2018
Jane, Mario, and Ronald each own 100 of the 300 outstandingshares in the Crafty Corporation. On August 30, 2015, each of themtransfers property to the corporation in a transaction thatqualifies for non recognition under Code Section 351. Mariotransferred Property A, which had a tax basis of $150,000 and afair market value of $80,000 at the time it was transferred. Duringthe time Crafty held Property A, its fair market value declined to$40,000. On May 20, 2017 Crafty Corporation adopted a plan ofliquidation. Two days later, as part of this plan, Property A wasdistributed to Ronald. a. Explain the tax consequences of this distribution for thecorporation. b. Suppose that Ronald purchases 75 of Janeâs shares in 2016.What would be the tax consequences of the distribution?
Jane, Mario, and Ronald each own 100 of the 300 outstandingshares in the Crafty Corporation. On August 30, 2015, each of themtransfers property to the corporation in a transaction thatqualifies for non recognition under Code Section 351. Mariotransferred Property A, which had a tax basis of $150,000 and afair market value of $80,000 at the time it was transferred. Duringthe time Crafty held Property A, its fair market value declined to$40,000. On May 20, 2017 Crafty Corporation adopted a plan ofliquidation. Two days later, as part of this plan, Property A wasdistributed to Ronald.
a. Explain the tax consequences of this distribution for thecorporation.
b. Suppose that Ronald purchases 75 of Janeâs shares in 2016.What would be the tax consequences of the distribution?
Tod ThielLv2
9 Nov 2018
