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bazaltina [42]
3 years ago
12

Riverwalk Corporation is liquidated, with Juan receiving $5,000 in money, other property having a $6,000 FMV, and a $1,000 mortg

age on the property. Juan's basis in his River walk stock is $8,000. Upon liquidation, Juan must recognize a gain of:_______.A) 0.B) $2,000.C) $3,000.D) $11,000.
Business
2 answers:
Lemur [1.5K]3 years ago
7 0

Answer:

B) $2,000.

Explanation:

Juan's gain/loss = net distribution - basis

  • net distribution = $5,000 (cash) + $6,000 (property) - $1,000 (mortgage) = $10,000
  • basis = $8,000

Juan's gain = $10,000 - $8,000 = $2,000

Even if Juan had previously transferred the property in a Section 351 exchange, he would still have to recognize a gain because the liquidation included other assets. If the liquidation had only included the land (e.g. FMV $11,000) and two years would have passed since the original Section 351 transfer, then Juan wouldn't have needed to pay taxes.

7nadin3 [17]3 years ago
5 0

Answer:

The correct option is B,$2000

Explanation:

The gain on the cash and property received by Juan can be computed thus:

Cash received                      $5,000

Property less mortgage:

Property value  $6000

Mortgage          ($1000)         $5000

Total                                        $10,000

less stock basis                       ($8,000)

gain on stock                           $2,000

Option A is since the value of cash and property received is not $8,000 which gives a no gain  no loss outcome.

Option C is wrong since the property mortgage of $1000 must be deducted from the property before computing the gain or loss.

Option D is obviously wrong as the $11,000 is just the summation of property value of $6000 without considering mortgage and the cash received.

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Attempts
jenyasd209 [6]

The following are topics in macroeconomics:

  1. The optimal interest rate for the Federal Reserve to target
  2. The effect of a large government's budget deficit on the economy's price level

The following are topics in microeconomics:

How a quota on textile imports affects the textile industry

<h3>What is microeconomics and macroeconomics?
</h3>

Microeconomics studies individuals and business decisions, while macroeconomics studies the government decisions and its impact on the economy.

Macroeconomics is a top-down approach while microeconomics is a bottom-up approach to analysing the economy.

To learn more about macroeconomics, please check: brainly.com/question/13244131

#SPJ1

4 0
1 year ago
Greta is the only female employee in the maintenance department of Hydro Hydraulics Inc. Greta’s supervisor and co-workers tease
Vladimir [108]
Isnt this a form of peer pressure?

5 0
3 years ago
Suppose you deposit ​$2,200 cash into your checking account. By how much will the total money supply increase as a result when t
zhannawk [14.2K]

Answer:

The money supply increases by $3300.

Explanation:

Money multiplier = 1/reserve ratio

= 1/0.4

= 2.5

the change in the money supply = deposit *multiplier -deposit

= $2,200*2.5 - $2,200  

= $3300

Therefore, The money supply increases by $3300.

6 0
3 years ago
Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternat
Juli2301 [7.4K]

Answer:

1. Net present value of Project A = -41,449.96

2. Net present value of Project B = $143,746.85

3. I would recommend that company accept Project B.

Explanation:

Note: This question is not complete as the requirement are omitted. The requirements are therefore provided to complete the question before answering it as follows:

Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:

                                                                       Project A           Project B

Cost of equipment required                         $ 135,000                $ 0

Working capital investment required                 $ 0               $ 135,000

Annual cash inflows                                       $ 25,000           $ 63,000

Salvage value of equipment in six years        $ 9,800                $ 0

Life of the project 6 years 6 years

The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries’ discount rate is 17%.

Required:

1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

3. Which investment alternative (if either) would you recommend that the company accept?

The explanation of the answers is now provided as follows:

1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

Cost of equipment required = $135,000

Using the formula for calculating the present value of an ordinary annuity, the present value (PV) of the annual cash inflows can be calculated as follows:

PV of annual cash inflow = Annual cash inflow * (1 - (1 / (1 + discount rate))^Project life) / discount rate) = $25,000 * ((1 - (1 / (1 + 0.17))^6) / 0.17) = $89,729.62

The present value (PV) of the salvage value can be calculated as follows:

PV of salvage value = Salvage value / (1 + + discount rate)^Project life = $9,800 / (1 + 0.17)^6 = $3,820.42

Net present value of Project A = PV of annual cash inflow + PV of salvage value - Cost of equipment required = $89,729.62 + $3,820.42 - $135,000 = -41,449.96

2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.)

Working capital investment required = $135,000

Using the formula for calculating the present value of an ordinary annuity, the present value (PV) of the annual cash inflows can be calculated as follows:

PV of annual cash inflow = Annual cash inflow * (1 - (1 / (1 + discount rate))^Project life) / discount rate) = $63,000 * ((1 - (1 / (1 + 0.17))^6) / 0.17) = $226,118.64

The present value (PV) of the Working capital investment required can be calculated as follows:

PV of Working capital investment required = Working capital investment required / (1 + + discount rate)^Project life = $135,000 / (1 + 0.17)^6 = $52,628.21

Net present value of Project B = PV of annual cash inflow + PV of Working capital investment required - Working capital investment required = = $226,118.64 + $52,628.21 - $135,000 = $143,746.85

3. Which investment alternative (if either) would you recommend that the company accept?

From parts 1 and 2 above, we have:

Net present value of Project A = -41,449.96

Net present value of Project B = $143,746.85

Since the Net present value of Project A is negative, it should be rejected.

Since the Net present value of Project B is positive, it should be accepted.

Therefore, I would recommend that company accept Project B.

6 0
3 years ago
An increase in interest ratesA. increases investment spending on​ machinery, equipment,​ factories, consumption spending on dura
RoseWind [281]

Answer:

The correct answer is option C.

Explanation:

An increase in the interest makes it more expensive to borrow money. In other words, the cost of borrowing increases. This will cause investment expenditure on machinery, equipment, and​ factories to decline.  

Increased interest rate also increases the opportunity cost of holding money. The consumers will get more return from saving. This will reduce, the consumer spending on durable goods.  

The increased interest rate will attract foreign capital inflows. The increase in demand for currency will increase its value. This will reduce exports and increase imports. As a result, net exports will decline.

8 0
3 years ago
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