Explore BrainMass

Explore BrainMass

    Subsidiary Liquidation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. Subsidiary liquidation

    ABC, Inc. owns 95% of the outstanding capital stock of XYZ, Inc. liquidates pursuant to IRC 332 and distributes property, as follows:

    To ABC, Inc. FMV $95,000, Basis $40,000
    To 5% shareholders FMV $ 5,000, Basis $2,000

    Will XYZ, Inc. recognize any gain or loss?

    2. Subsidiary liquidation

    ABC, Inc. owns 90 % of the outstanding capital stock of XYZ, Inc. Albert Able owns the remaining 10 %. XYZ, Inc owns two assets, as follows:

    Asset No.1 FMV $70,000, Basis $30,000
    Asset No.2 (cash) $ 30,000

    XYZ, Inc. adopts a plan of complete liquidation and distributes its assets, as follows:

    To ABC, Inc. Asset No1 and $20,000 cash
    To Albert Able $10,000 cash

    Will XYZ, Inc. recognize any gain on the distribution ?

    © BrainMass Inc. brainmass.com June 3, 2020, 8:05 pm ad1c9bdddf
    https://brainmass.com/business/accounting/subsidiary-liquidation-122728

    Solution Preview

    (1) Subsidiary recognizes gains but not losses on distributions of property to minority shareholder [IRC ...

    Solution Summary

    The solution examines subsidiary liquidation.

    $2.19

    ADVERTISEMENT