What are tax consequences of these distributions to Pluto

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Reference no: EM132699257

Question - The stock of Saturn Corporation (E&P of $1.5 million) is owned as follows: 90% by Pluto Corporation (basis of $900,000), and 10% by Neptune (basis of $70,000). Both shareholders acquired their shares in Saturn more than six years ago. In the current year, Saturn Corporation liquidates and distributes land worth $1.1 million (basis of $1.3 million) and equipment worth $700,000 (basis of $410,000) to Pluto Corporation. Saturn also distributes securities worth $260,000 (basis of $200,000) to Neptune.

Required -

a) What are the tax consequences of these distributions to Pluto?

b) What are the tax consequences of these distributions to Saturn?

c) What are the tax consequences of these distributions to Neptune?

Reference no: EM132699257

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