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SU ACC4020 W4 A2 Moore D
SU ACC4020 W4 A2 Moore D
Dollie Moore
South University Online
-$220,000
Distribution to Maria -$187,000
Distribution to Paul -$33,000
-$220,000
0% distribution to Maria -$110,000
0% distribution to Paul -$110,000
E&P $560,000
Cash $175,000
FMV (marketable securities) $230,000
Basis (marketable securities) $250,000
FMV (unimproved land) $600,000
Basis (unimproved land) $300,000
Unsecured note payable $50,000
Mortgage $270,000
Net operating loss carryover $45,000
Stock Purchase (7 years ago) $160,000
a) How much gain (or loss) will Pink Corporation recognize upon the liquidating
distribution of its assets and liabilities to Wren Corporation?
Under 337, Pink will not recognize any gain/loss on the liquidation distribution of its
assets and liabilities to Wren. The liquidation meets the requirements of 332, and
seven years ago when Wren purchased the stock, a 338 was not available to Wren.
b) How much gain (or loss) will Wren Corporation recognize in the liquidation of Pink?
Under 332, Wren will not recognize any gain/loss on the liquidation.
c) What basis will Wren have in the marketable securities and unimproved land it receives
in the liquidation?
d) What happen to Pink's earnings and profits and net operating loss carryover?
Under 381, the E&P and the net operating loss carryover will be aquired by Wren.
Basis $530,000
E&P $560,000
Net operating loss carryover $45,000