ACC 4302

Question 1 3.33333 out of 3.33333 points Cardinal, the parent corporation, has a basis of $440,000 in the stock of Vulture Corporation, a subsidiary in which it owns 90% of all classes of stock. Cardinal purchased the stock in Vulture Corporation 10 years ago. In the current year, Cardinal Corporation liquidates Vulture Corporation and acquires assets worth $500,000 with a tax basis to Vulture Corporation of $380,000. What basis will Cardinal Corporation have in the assets acquired from V...

T/F 1. In general, if a shareholder’s ownership interest is not diminished as a result of a stock redemption, the Code will treat the transaction as a sale or exchange. a. True b. False ANSWER: False RATIONALE: If a shareholder’s ownership interest is not diminished as a result of a stock redemption, the Code generally will treat the transaction as a dividend distribution. 2. A shareholder’s basis in property acquired in a stock redemption is the property’s fair market value as ...

REVIEW EXAM 1- ACC 4302- Corporation Acct 1/. A corporation sells property (basis of $50,000) to its sole shareholder for $40,000, the fair market value of the property. With respect to the sale: - The shareholder has a basis of $40,000 in the property (The shareholder has a basis equal to its cost of $40,000. The loss of $10,000 to the corporation is not deductible because of Section 267. But since the overall economic effect of the transaction is a decrease in the corporation's assets b...