Parent Corporation Purchases All of Target Corporation's Stock for $200,000

question 11

Essay

Parent Corporation purchases all of Target Corporation's stock for $200,000 and makes a deemed liquidation election. Target Corporation has Class I assets with an adjusted basis of $55,000 and an FMV of $55,000; Class II assets with an adjusted basis of $40,000 and an FMV of $60,000; and Class V assets with an adjusted basis of $70,000 and an FMV of $100,000. The Class V assets are subject to a $20,000 liability. Assume a 34% corporate tax rate.
Assuming that the adjusted grossed-up basis is $237,000 ($200,000 + $20,000 + $17,000 federal income taxes), what is the allocation of adjusted grossed-up basis to Class VI assets?

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Definitions:

Acceptable

Describes standards or conditions that are generally agreed upon as satisfactory or adequate.

Shoes For Crews

A company known for specializing in slip-resistant footwear designed for workers in the service and healthcare industries.

Warranty Implemented

The action of putting into effect a guarantee, typically by a manufacturer, promising to repair or replace an item if necessary within a specified period.

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The negative economic impact suffered by an individual, organization, or entity, typically quantified by the decrease in monetary value or assets.