119) Atlantic Corporation, a calendar-year taxpayer, has $120,000 of accumulated E & P deficit as of January 1. Atlantic's current E & P is $40,000. The corporation makes a $50,000 distribution to its shareholders. Shareholders have stock basis of $60,000. What is the amount of Atlantic's E & P deficit at the end of the year?
120) Nguyen Corporation, a calendar-year corporation, has a $40,000 current E&P deficit and a $60,000 positive accumulated E&P balance. Also assume that shareholders of the corporation have a total basis in outstanding shares of $35,000. A $75,000 distribution is made to the shareholders on the last day of the year. What is the tax treatment of the $75,000 distribution to the shareholders?
121) Lafayette Corporation distributes $80,000 in cash along with land having a $40,000 adjusted basis and a $70,000 FMV to its shareholder, Gus. The corporation has accumulated substantial earnings and profits.
a.What are the tax consequences to Lafayette Corporation?
b.What are the tax consequences to the shareholder?
c.What is the shareholder's basis in the land?
122) Pursuant to a complete liquidation, Southern Electric Corporation distributes the following assets to its shareholders:
Inventory: $15,000 basis, $20,000 FMV
Land held as an investment: $10,000 basis, $40,000 FMV
Marketable securities: $35,000 basis; $30,000 FMV
What are the tax consequences to Southern Electric Corporation?
123) Whaler Corporation makes a liquidating distribution of land with a $70,000 adjusted basis and a $100,000 FMV to shareholder Horton, who surrenders his Whaler stock (adjusted basis $60,000) to the corporation. Alice, another shareholder, receives $100,000 cash for her shares ($115,000 adjusted basis). What are the tax consequences to both Horton and Alice and what is Horton's basis in the land?