Finch and cardinal as a result of finchs liquidation

Assignment Help Accounting Basics
Reference no: EM13124237

Cardinal Corporation has a basis of $800,000 in the stock of Finch Corporation, a subsidiary in which it owns 90% of all classes of stock. Cardinal has maintained this ownership interest for more than four years. In the current year, Cardinal liquidates Finch Corporation and acquires assets worth $1,300,000 and with an adjusted basis to Finch of $750,000. At the time of liquidation, Finch had E & P of $400,000, and a short-term capital loss carryover of $25,000.

a. What is the recognized gain or loss to Finch and to Cardinal as a result of Finch's liquidation?

b. What basis will Cardinal Corporation have in the assets acquired from Finch Corporation?

c. What happens to Finch's E & P and short-term capital loss carryover?

Reference no: EM13124237


Write a Review

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