Question - Corp A is interested in purchasing Corp B. Corp B has only one asset, a building with an adjusted basis of $35,000 and a fair market value of $80,000. Corp A has a single shareholder, Anton, and Corp B has a single shareholder., Beth. Anton's adjusted basis in his Corp A stock is $60,000 and the stock is worth $150,000. Beth's adjusted basis in her Corp B stock is $26,000 and the stock value is $80,000. The legal fees associated with an acquisition are $2,500.
1. Assume corp A acquires Corp B's assets followed by a liquidation of Corp B.
a. What gain / loss would be recognized by corp A, Corp B, Anton and Beth?
b. After the transaction what is the adjusted basis of Anton's Corp A stock, the corp B asset and Beth's corp B stock.
2. Assume Corp A acquires Corp B's stock without a section 228 election.
a. What gain / loss would be recognized by corp A, Corp B, Anton and Beth?
b. After the transaction what the adjusted basis of Anton's corp A stock, the Corp B asset and Corp A's Corp B stock.