Illustrate what are the tax consequences to daisy

Assignment Help Financial Accounting
Reference no: EM13126241

Daisy Corporation is the sole shareholder of Ostrich Corporation, which it hopes to sell within the next three years. The Ostrich stock (basis of $25 million) is currently worth $30 million, but Daisy believes that it would be easier to find a buyer if it was worth less. To lower the value of its stock, Ostrich distributes $4 million cash to Daisy (sufficient E & P exists to cover the distribution). At a later date, Daisy sells Ostrich for $26
million.

a. What are the tax consequences to Daisy on the sale?

Reference no: EM13126241

Questions Cloud

What is their year 1 gross income : Kabuo and Melinda got married on December 15, year 1. Kabuo's salary for the year was $54,000, and Melinda's was $62,000. In addition, Kabuo received $250 of interest income, ($100 of which was from municipal bonds), and Melinda received $10,000 o..
What proportion of children have total cholesterol in range : What proportion of children 10 to 15 years of age have total cholesterol between 180 and 190? B. what proportion of children 10 to 15 years of age would be classified.
Annual manufacturing overhead cost budget : The following information was taken from the annual manufacturing overhead cost budget of Coen Company.
Compute binomial coefficients and combinations : How many committees are there? How many committees of 5 can be formed from 8, given that two particular individuals are to be included on the committee?
Illustrate what are the tax consequences to daisy : To lower the value of its stock, Ostrich distributes $4 million cash to Daisy (sufficient E & P exists to cover the distribution). At a later date, Daisy sells Ostrich for $26 million. Illustrate what are the tax consequences to Daisy on the sale?
Binomial coefficients and combinations : Four people select a main dish from a menu of 7 items. How many choices are possible: If a record is kept of who selected which choice (as a waiter would)
What is the ratio of the larger to smaller value : One radio station operates on an assigned frequency of 88.1 megahertz while another operates on an assigned frequency of 1460 kilohertz. What is the ratio of the larger to smaller value?
Probability randomly selected terminal will last five years : The life expectancy of computer terminals is normally distributed with a mean of 4 years and a standard deviation of 10 months. What is the probability that a randomly selected terminal will last more than 5 years?
Does a negative residual income amount equate : What do you think would be an acceptable return on investment in the current economic climate? Please explain.

Reviews

Write a Review

 

Financial Accounting Questions & Answers

  Contribution income statement up to operating income

Contribution Income Statement up to operating income - Straightforward Contribution Income Statement

  Illustrate what is the amount of cost of goods sold

It sold 150 units for $45 each from March 1 through December 31. If the company uses the Last-In, First-Out inventory costing method, illustrate what is the amount of Cost of goods sold on the December 31 income statement

  What is organizational legitimacy

What is organizational legitimacy and why might it be considered to be a 'resource'?

  Find the activity variance for revenue

Find the activity variance for revenue? Describe this variance and find the spending variance for the cost of ingredients? Describe this variance.

  Government-wide financial statements

What information do the government-wide financial statements present and What information do the fund financial statements present?

  Questions based on stocks and debts

Multiple choice questions on stocks and debts - Which of the following statements is CORRECT?

  Calculate the mix and quantity variance for data

Calculate the mix and quantity variance for data

  Purpose a post-closing trial balance

Purpose a post-closing trial balance. Also prove the accuracy of subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.

  Show how you would measure these fair values

The directors of Snapper Ltd want to calculate both the factory and the land at fair value as at 30 June 2010 Show how you would measure these fair values

  Automotive service franchises in a metropolitan area

outgrown her father's accountant and requires having new ideas to help her save tax dollars so she will reinvest more money in the business. prepare and expects to add six more locations in each of the next two years.

  Evaluate the company margin of safety

Evaluate the company margin of safety and Compute the company margin of safety as a percentage of its sales.

  Short case study report

Short case study report - A summary of the reason for and nature of the contract

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd