Discuss the mason''s shareholders will realize

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A. JIM is acquiring all of the assets of Mason Machining in a merger transaction. Mason transfers assets having a fair market value (FMV) of $1,775,000 and an adjusted basis of $995,000 and $200,000 in liabilities to JIM in exchange for $750,000 in cash and $800,000 of JIM's common stock.

1. Calculate Mason's gain on this transaction

2. How much of this gain will Mason recognize?

3. How much tax liability will Mason incur from this transfer?

B. Mason distributes the JIM stock and cash to its shareholders for all of their shares of Mason's stock. Shareholder's basis in this stock is $600,000.

1. Calculate how much gain the Mason's shareholder's will realize and recognize on this transfer?

2. Explain the tax implications of JIM

Reference no: EM131813903

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