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Question :
Distribution of Appreciated Property. In the current year, Sedgwick Corporation has $100,000 of current and accumulated E&P. On March 3, Sedgwick distributes to its shareholder Dina a parcel of land (a capital asset) having a $56,000 FMV. The land has a $40,000 adjusted basis (for both taxable income and E&P purposes) to Sedgwick and is subject to an $8,000 mortgage, which Dina assumes. Consider a 34% marginal corporate tax rate.
a. What is the amount and character of the profits Dina recognizes as a result of the distribution?
b. Evaluate Dina's basis in the land?
c. What are the amount and character of Sedgwick's profit or loss as a result of the distribution?
d. What effect does the distribution have on Sedgwick's E&P?
The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?
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Which of the subsequent statements is accurate with respect to this transaction
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Show the likelihood of these payments being treated as constructive dividends. If a payment is deemed to be a constructive dividend, show how such a payment will be treated.
when market value is $40 per share. Prior to split, Abbott had 50,000 shares of $10 par value common stock issued and outstanding. After split, Find the par value of the stock
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An investment project costs $21,500 and has annual cash flows of $4,200 for 6 years. If the discount rate is 20 percent, illustrate what is the discounted payback period?
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