Saucer Corporation Has a Value of $800,000, Basis in Its

question 73

Multiple Choice

Saucer Corporation has a value of $800,000, basis in its assets of $670,000, and liabilities of $200,000. Cup Corporation acquires 90% of Saucer's assets by exchanging $550,000 of its voting stock, $20,000 cash, and assuming $150,000 of Saucer's liabilities. The remaining 10% of Saucer's assets not acquired is $80,000 cash. Saucer distributes the Cup stock, $100,000 in cash and associated $50,000 in liabilities to its shareholder, Sam, in exchange for his Saucer stock basis $560,000) . Saucer then liquidates. How will this transaction be treated for tax purposes?

• A) As a "Type A" reorganization. Sam recognizes $50,000 gain and Saucer recognizes $20,000 gain.
• B) As a "Type A" reorganization. Sam recognizes $100,000 gain and Saucer recognizes $120,000 gain.
• C) As a "Type C" reorganization. Sam recognizes $50,000 gain and Saucer recognizes $20,000 gain.
• D) As a "Type C" reorganization. Sam recognizes $40,000 gain and Saucer recognizes no gain.
• E) As a taxable transaction.

---

Definitions:

Qualitative Research Approach

A research methodology that focuses on understanding phenomena through observation and interpretation, often involving detailed, non-numerical data.

Qualitative Research Methods

Research strategies focusing on understanding the quality, meaning, or essence of human experience and social phenomena, often through interviews, observations, and textual analysis.

Overgeneralization

Overgeneralization is a cognitive distortion involving broad conclusions or general statements based on a single event or piece of evidence, often leading to inaccurate judgements or stereotypes.

Authenticity

The quality of being genuine, real, or true, not copied or false; a concept highly valued in various contexts from art to personal identity.