Sole shareholder in closely held business

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Reference no: EM131894112

1. Alice Kemper is the sole shareholder in a closely held business. She sold her business to her key employee, Tom, in return for an agreement to pay an annunity as long as she lives. At Alice’s death, Tom’s basis in the business is equal to the

a. Fair market value of the business on the date Alice died

b. Amount of annuity payments made during Alice’s lifetime

c. Present value of payments to be made over Alice’s expected lifespan when the agreement was made

d. Future value of payments to be made over Alice’s expected lifespan when the agreement was made

2. An intra-family loan can be used to

a. Provide the seller with a way to indirectly tap the equity of an asset

b. Remove an appreciating asset from the seller’s estate

c. Equalize distributions among family members

d. An intra-family loan can accomplish all of these objectives

Reference no: EM131894112

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