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

question 26

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. What is the adjusted grossed-up basis of Target Corporation's stock?

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Definitions:

Time Flexibility

The ability to adapt schedules or timelines to accommodate changes or unexpected demands in processes or operations.

Renal Capsule

A tough fibrous layer surrounding the kidney and providing it with structural support and protection.

Connective Tissue

Tissue that supports, connects, or separates different types of tissues and organs in the body, composed of cells embedded in a matrix.

Kidney

A vital organ that filters blood to remove waste products and excess fluids, forming urine.