universityofphoenixhomeworkhelp

C:6-8 In many cases, usually no because the two alternatives results are the same. A corporation’s shareholders recognize the distributions gain or loss when a corporation recognizes its gains and losses, sells its assets, and pays its taxes. If the... More

C:6-8 In many cases, usually no because the two alternatives results are the same. A corporation’s shareholders recognize the distributions gain or loss when a corporation recognizes its gains and losses, sells its assets, and pays its taxes. If the corporation’s assets are distributed directly to the shareholders, it will still recognize gain or losses as if it sold its assets. Then the corporation would pay its taxes and distribute the remaining assets to its shareholders. Under the first alternative, the distributed assets FMV must be the same amount as the distributed cash. Since shareholders take a FMV basis in the distributed assets, shareholders recognize the same gain or loss. Shareholders do not recognize further gain or loss upon selling assets. The results may be different if the corporation under Sec 336(d) is subject to loss limitations upon property distribution to certain shareholders. The limitations of Sec 336 do not apply to direct sales by the corporation to outside Less