Stock after accounting for the distribution

Assignment Help Accounting Basics

Reference no: EM133611999

Case: Castle Construction, Inc. is a real estate development company organized as an S corporation. The company's sole shareholder, Celia, has a tax basis in her Castle stock of $100,000. This year, the company reported a net operating loss of ($129,000). It also decided to distribute a parcel of land with a tax basis (to Castle) of $65,000 and a fair market value of $185,000. Prior to the distribution, Castle was holding the land as inventory. It decided to distribute the land to Celia because it no longer planned to develop that particular property.

Question 1. Will Celia recognize any gain in connection with the receipt of the distribution? See Treasury Regs. §1.1367-1(f).

Question 2. What will be her tax basis in the land?

Question 3. What will be her remaining tax basis in her stock after accounting for the distribution?

Question 4. How would your answers change if the land had been encumbered by a $75,000 liability, for which Celia assumed personal responsibility upon receipt of the distribution?

Reference no: EM133611999

Questions Cloud

What you think the service user would say in response : Be sure that the questions you ask are different than those you asked. Write what you think the service user would say in response to each question.

What are perceptions of safety on college campuses : What are perceptions of safety on College Campuses? What is the cost of the problem to Society? Define College Safety?

What the value of these shares would be in : What the value of these shares would be in an open market. This can be a ground for fraud and some speculate this is how Enron did it

Describe the differences among exploratory-descriptive : Describe the differences among exploratory, descriptive, and explanatory research.

Stock after accounting for the distribution : How would your answers change if the land had been encumbered by a $75,000 liability, for which Celia assumed personal responsibility upon receipt

Define societal pressures : Define societal pressures, then provide Two examples of societal pressures and how might those pressures effect one's individual choices?

Would confirmations help her gather evidence in preparing : would confirmations help her gather evidence in preparing for prosecution of financial statement fraud? why

What is test of control for recording revenue : What is test of control for recording revenue when goods have not been shipped or services have not been performed

Why did this client become confused and combative : Why did this client become confused and combative? What pivotal decision made in the ER directly caused this client's worsening condition?

User Account

All Pages