Chapter 7 Corporate Acquisitions and Reorganizations

75) Acquiring Corporation acquires all of
the assets of Target Corporation in exchange for $3,000,000 of Acquiring common
stock, and the assumption of $2,000,000 of Target’s liabilities. The assets had
a $2,300,000 adjusted basis to Target. Target’s sole shareholder, Paula, had a
$1,000,000 adjusted basis for her stock. Target Corporation had $600,000 of
E&P on the acquisition date. Paula receives all of the Acquiring common
stock in liquidation of Target. What are the tax consequences of the
acquisition to: Acquiring, Target, and Paula?

76) Zebra Corporation transfers assets
with a $120,000 basis and a $250,000 FMV to Hat Corporation for common stock
worth $200,000 and cash of $50,000. The exchange qualifies as a tax-free
reorganization. Zebra Corporation distributes the stock and cash to its
shareholders pursuant to its liquidation. How much gain must Zebra Corporation
recognize?

77) Brad exchanges 1,000 shares of
Goodyear Corporation stock having a $15,000 basis for Atlas Corporation stock
having a $25,000 FMV as part of a Type A tax-free reorganization. Brad also
receives $6,000 cash as part of the reorganization. How much gain must Brad
recognize?

78) Martha owns Gator Corporation stock
having an adjusted basis of $21,000. As part of a tax-free reorganization
involving Gator and Baker Corporations, Martha exchanges her Gator stock for
$18,000 of Baker stock and $6,000 (face amount and FMV) of Baker securities.
What is Martha’s basis in the Baker stock?

79) Marty is a party to a tax-free
reorganization. He has a basis of $22,000 in his Van Corporation stock that has
a FMV of $35,000. Marty exchanges the Van stock for Young
Corporation stock worth $29,000 and Young
securities with a face amount of $7,000 and a FMV of $6,000. What is Marty’s
basis in the Young securities?

80) Acme Corporation acquires Fisher
Corporation’s assets in a Type A reorganization for $800,000 of Acme’s
nonvoting preferred stock and $200,000 (face amount and FMV) of securities. The
assets have an adjusted basis of $600,000 and a FMV of $1,500,000. In addition,
Acme Corporation assumes $500,000 of Fisher’s liabilities. At the time of the
transfer, Acme’s E&P is $400,000. Fisher distributes the stock and
securities to its sole shareholder Barbara for all of her Fisher stock. After
the reorganization, Barbara owns 25% of Acme’s stock. Barbara has an adjusted
basis of $400,000 in her Fisher stock. What is Barbara’s basis for her Acme
stock?