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stiks02 [169]
2 years ago
8

Mars Corporation merges into Jupiter Corporation by exchanging all of its assets for 300,000 shares of Jupiter stock valued at $

2 per share and $100,000 cash. Wanda, the sole shareholder of Mars, surrenders her Mars stock (basis $900,000) and receives all of the Jupiter stock transferred to Mars plus the $100,000. How does Wanda treat this transaction on her tax return
Business
1 answer:
MA_775_DIABLO [31]2 years ago
3 0

Answer: capital loss of $200000

Explanation:

To solve the question goes thus:

Value of shares that was received from Jupiter = 300000 × $2 = $600,000

Cash received = $100,000

Total gotten = $700,000

We then deduct the value of stock that was foregone by Mars. This will be:

= $700,000 - $900,000

= - $200,000

Therefore, a capital loss of $200,000 would be disclosed in the Income tax return.

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Why an investor might choose to have less than 20% holding in a company if they could have more?
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3 years ago
You have the following information regarding a bond that pays semi-annual coupon payments: Time to maturity is 12 years Coupon R
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7 0
3 years ago
Bad Brads BBQ purchased a piece of equipment by paying $5,000 cash. They also incurred a shipping cost of $400 to get the equipm
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Answer:

The $5,400 is the amount should Bad Brads BBQ record the equipment.

Explanation:

According to the Generally Accepted Accounting Principles (GAAP), the amount of asset is recorded at cost or fair market value which ever is lower.

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And, the fair market value is $7,000.

By using the above explanation, the $5400 is the lesser amount than the $7,000.

Hence, the $5,400 is the amount should Bad Brads BBQ record the equipment.

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