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What are the tax consequences to laura

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Question - X Corp, a C corporation, is owned by Laura (100 shares) and Z Corp (100 shares). Laura and Z Corp are not related. X Corp has operated two separate divisions for 15 years-one that manufactures umbrellas and one that sells raincoats. X Corp terminates its manufacturing operation in 2022 and distributes the manufacturing assets pro rata to Laura and Z Corp in redemption of 25 shares of each shareholder's stock. X Corp continues to run the raincoat sales business. The manufacturing assets have a basis of $500 and a fair market value of $2,000. Laura's basis in her X Corp stock is $100; Z Corp's basis in its X Corp stock is $300. X Corp has $3,000 of E&P, not taking into account the redemption. What are the tax consequences to Laura, X Corp, and Z Corp of the distribution (gain/loss/income, stock basis, asset basis, E&P)?

Reference no: EM133183321

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