Reference no: EM131116814
Research Problems 1
As part of an integrated plan. Manchester Corporation creates Bedford Corporation as a wholly owned subsidiary. Then, Manchester acquires all of Bismarck Corporation by merging Bedford into Bismarck. After this transaction, Bedford no longer exists, and Manchester owns all of the Bismarck stock valued at $1million. Bismarck shareholder received Manchester stock valued at $700,000 and $300,000 of cash for their share of Bismarck. Lastly, Bismarck combines with Manchester in a statutory merger.
The final result is that Manchester owns all of the assets of Bismarck, and 70 percent of the Bismarck shareholders are now Manchester shareholders. Explain whether this step transaction restructuring qualifies as a tax-free reorganization. Support your position with citations to primary tax sources.
Problem 2
The Chief consolidated group reports the following results for the tax year. Dollar amounts are listed in millions.
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Parent
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Sub One
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Sub Two
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Sub Three
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Consolidated
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Ordinary Income
Capital gain/loss
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$600
-0-
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$200
-0-
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$140
60
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($90)
(25)
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$850
35
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1231 gain/loss Separate taxable incomes
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250
$850
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-0-
$200
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(50)
$150
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- 0 -
( 90 )
with a $25 capital loss carryover
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200
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Consolidated taxable income
Consolidated Tax Liability
Energy tax credit, from Sub One
Net tax due
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$1,085
$ 380
( 70)
$ 310
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Determine each member's share of the consolidated tax liability. All of the members have consented to use the relative taxable income method. Assume a 35% marginal tax rate.
Question 3
Martinho is a citizen of Brazil and lives there year-round. He has invested in a plot of Illinois farmland with a tax basis to him of $1 million. Martinho hasno other business or investment activities in the United States. He is not subject to the alternative minimum tax. Upon the sale of the land for $1.5 million to Emma, an Illinois person, what are the Federal income tax consequences to Martinho?
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Cost function from a production function
: Calculate a cost function from a production function and explain how economic costs differ from accounting costs.
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Used the cost method to account for its investment
: Kay acquired its 40% interest in Adams for $360,000 in Year 1, when Adams's retained earnings amounted to $170,000. The acquisition differential on that date was fully amortized by the end of Year 5.
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Control in the behavioral or manipulative sense
: Theme 2 Traditionally theorist suggest that the managerial function of controlling should not be confused with control in the behavioral or manipulative sense. How can a manager be assured or measure work that is performed when the employee may be 5,..
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What is the present value
: What is the present value (at time zero) of all revenues for the next 5 year time frame? Assume a time value of money of 10%. Explain whether or not it is fair to consider the net cash flow to occur at the end of the period. How will you alter yo..
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Determine each members share of consolidated tax liability
: Determine each member's share of the consolidated tax liability. All of the members have consented to use the relative taxable income method. Assume a 35% marginal tax rate.
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Compute the price you expect to receive
: Using the following equation, compute the price you expect to receive for the loan if the annual interest rate is 6 percent, the car payment is $430 per month, and the loan term is five years.
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Type of returns to expect
: Define what it means when a bond is callable. Provide two measures you can review to understand what type of returns to expect if the bond is called or if it is not called.
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Fluoridation was or may be dangerous to health
: New York City’s charter authorized the New York City Board of Health to adopt a health code that it declared to have the force and effect of law. The board adopted a code that provided for the fluoridation of the public water supply. it unlawfully im..
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What are the harmful impacts of the pollution
: What steps are in place to eliminate the pollutant or to mitigate harm from the pollutant? Describe examples of laws or regulations that apply to the pollution and its sources.
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