Solved by verified expert :Questions:
14-24 and 14-51, 17-1 and 17-24
Problems
(Show your work.): 14-52, 17-40, and 17-49
14-24
What is the purpose of the dividends received deduction? What corporations are
entitled to claim this deduction? What dividends qualify for this deduction?
What
is the purpose of the dividends-received deduction? What corporations are
entitled to claim this deduction? What dividends qualify for this deduction?
The purpose of the dividends received deduction is so that corporations would
not be taxed at a corporate level a shareholder level or if when dividends or a
recipient corporation.
14-51
What is the purpose of the reconciliation of taxable income with book income?
17-1
Identify and briefly describe the seven types of corporate reorganization.
Type
A: Mergers and Consolidations
Type
B: Acquisition — Target Corporation Subsidiary
Type
C: Acquisition — Target Corporation Liquidation
Type
D: Transfer
Type
E: Recapitalization
Type
F: Identity Change
Type
G: Transfer
17-24
Define and differentiate a spin-off, split-off, and split-up.
Spin
off –
Split
off-
Split
up –
14-52
Sam Rogers forms a corporation. Sam transfers to the corporation property
having a basis to him of $15,000 and a fair market value of $27,000 for 900
shares of the $10 par stock of the corporation. A year later, Bill Morrison,
who is not related to Sam, transfers property having a basis to him of $1,000
and a fair market value of $3,000 for 100 shares of the corporate stock. The
corporation issued no other stock.
•
a. How much gain does Sam recognize on his exchange? What is the basis to Sam
of his 900 shares?
•
b. How much gain does Bill recognize on his exchange? What is the basis to Bill
of his 100 shares?
•
c. What gain or loss is recognized by the corporation when it issues its shares
to Sam? What is the basis to the corporation of the property it received from
Sam?
•
d. What is the gain or loss recognized by the corporation when it issues its
shares to Bill? What is the basis to the corporation of the property it
received from Bill?
17-40
Superior Corporation acquired Taylor Corporation pursuant to a statutory merger
under state law. As a result of the merger, Taylor Corporation’s former
shareholders received common stock in Superior having a value of $300,000,
long-term bonds of Superior with a principal amount (and fair market value) of
$500,000, and cash of $200,000. What type of reorganization has taken place?
Describe the tax consequences to Taylor Corporation, its former shareholders,
and Superior Corporation.
17-49
Shipyard Corp. acquired Boatworks Corp. in a Type A reorganization on July 1,
2012. On the date of acquisition, Boatworks had a deficit in its earnings and
profits of $30,000. Although Shipyard had no accumulated earnings and profits,
its current earnings and profits from its calendar-year 2012 operations
totalled $40,000. What amount of the acquired earnings and profits deficit of
$30,000 can be used to off -set Shipyard’s current earnings and profits for
2012?
