Tax consequences to subsidiary and parent

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Reference no: EM135661

Liquidation of Subsidiary - Tax Consequences to Subsidiary and Parent

At the time of its liquidation under $332, Cardinal Corporation (E & P of $560,000) had the subsequent assets and liabilities: cash ($175,000); marketable securities (fair market value of $230,000, basis of $250,000); unimproved land (fair market value of $600,000, basis of $300,000); un-secured note payable ($50,000); and mortgage on the unimproved land ($270,000). Cardinal also had a total operating loss carryover of $45,000. Wren Corporation got all of the stock of Cardinal seven years ago for $160,000.

If an amount is zero, enter "0".

a. Cardinal Corporation identifies in the amount of $ on its liquidation under $337.

b. Wren Corporation recognizes in the amount of $ on the liquidation under $332.

c. What basis may Wren have in the marketable securities and unimproved land it receives in the liquidation?

Wren Corporation has $ basis for the marketable securities and $ for the unimproved land.

d. What happens to Cardinal's E and P and net operating loss carryover?

Wren Corporation acquires $of Cardinal Corporation's E & P and $ of the net operating loss carryover under $381.

Reference no: EM135661

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