Kiara Owns 100% of the Shares of Lion Corporation

question 69

Essay

Kiara owns 100% of the shares of Lion Corporation. Kiara's basis is $70,000 and the FMV of the shares is $200,000. Kiara is willing to sell all of the stock to Tia, but Tia is unwilling to pay more than $150,000 for the stock because the Corporation has excess cash balances. They have agreed that Kiara can withdraw $50,000 in cash from Lion before the stock sale. What tax issues should be considered with respect to Kiara and Tia's agreement?

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Definitions:

Solitary Work Activity

Tasks or projects performed independently by an individual without collaboration or assistance from others.

Intense Working Relationships

Refers to work relationships characterized by deep engagement, high levels of collaboration, and often significant emotional involvement among team members.

Moderate Risk

A level of danger or uncertainty that is considered to be within an acceptable range for undertaking certain actions or decisions.

Democratic Style

A style of leadership in which the leader uses interaction and collaboration with followers to direct the work and work environment.