ACC 4020 Week 4 Assignment 2 Pink Corporation NEW
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acc 4020 week 4 assignment 2 pink corporation new
Pink Corporation acquired land and securities in a §351 tax-free exchange in 2011. on the date of transfer, the land had a basis of $720,000 and a fair market value of $1 million, and the securities had a basis of $110,000 and a fair market value of $250,000. Pink Corporation has two shareholders, Maria and Paul, who are unrelated. Maria owns 85% of the stock in the corporation, and Paul owns 15%. Pink adopts a plan of liquidation in 2012. On this date, the value of the land has decreased to $500,000. What is the effect of each of the following on Pink Corporation? Which option should be selected? Justify.
At the time of its liquidation under §332, Pink Corporation (earnings and Profits of $560,000) had the following assets and liabilities: cash ($175,000), marketable securities (fair market value of $230,000 basis of $250,000), unimproved land (fair market value $600,000 basis of $300,000), unsecured note payable ($50,000), and mortgage on the unimproved land ($270,000). Pink Corporation also had a net operating loss carryover of $45,000. Wren Corporation acquired all of the stock of Pink Corporation seven years ago $160,000.