Questions from Federal Taxation

Q: Explain why tax advisors caution people who are starting a new business

Explain why tax advisors caution people who are starting a new business that the tax costs of incorporating a business may be low while the tax costs of liquidating a business may be high.

Q: Explain the following statement: A corporation may be liquidated for tax

Explain the following statement: A corporation may be liquidated for tax purposes even though dissolution has not occurred under state corporation law.

Q: Compare the tax consequences to the shareholder and the distributing corporation of

Compare the tax consequences to the shareholder and the distributing corporation of the following three kinds of corporate distributions: ordinary dividends, stock redemptions, and complete liquidatio...

Q: In the current year, Ed, Fran, and George form

In the current year, Ed, Fran, and George form Jet Corporation. Ed contributes land (a capital asset) having a $35,000 FMV purchased as an investment four years ago for $15,000 in exchange for 35 shar...

Q: What event or occurrence determines when a cash or accrual method of

What event or occurrence determines when a cash or accrual method of accounting taxpayer reports a liquidating distribution?

Q: Explain why a shareholder receiving a liquidating distribution would prefer to receive

Explain why a shareholder receiving a liquidating distribution would prefer to receive either capital gain treatment or ordinary loss treatment.

Q: A liquidating corporation could either (1) sell its assets and

A liquidating corporation could either (1) sell its assets and then distribute remaining cash to its shareholders or (2) distribute its assets directly to the shareholders who then sell the distribute...

Q: Explain the circumstances in which a liquidating corporation does not recognize gain

Explain the circumstances in which a liquidating corporation does not recognize gain and/or loss when making a liquidating distribution.

Q: Kelly Corporation makes a liquidating distribution. Among other property, it

Kelly Corporation makes a liquidating distribution. Among other property, it distributes land subject to a mortgage. The mortgage amount exceeds both the adjusted basis and FMV for the land. Explain t...

Q: Explain the congressional intent behind the enactment of the Sec. 332

Explain the congressional intent behind the enactment of the Sec. 332 rules regarding the liquidation of a subsidiary corporation.