Carly Owns 25% of Base Corporation's Single Class of Stock

question 46

Multiple Choice

Carly owns 25% of Base Corporation's single class of stock and Premier Corporation owns the remaining 75%. Carly's basis in the Base stock is $200,000 and Premier Corporation's basis in the Base stock is $600,000. Carly receives property with a $175,000 adjusted basis and a $250,000 FMV and Premier Corporation receives property with a $600,000 adjusted basis and a $750,000 FMV in complete liquidation of Base Corporation. All of Base's cash is used to pay its liabilities. Which of following statements is correct concerning the tax effects of the liquidation?

• A)Neither Carly nor Premier Corporation will recognize a gain.
• B)Carly will recognize some gain but Premier Corporation will not recognize any gain.
• C)Both Carly and Premier will recognize some gain.
• D)Carly will not recognize any gain but Premier will recognize some gain.

Understand the role of variance analysis in budgeting and financial planning.

Develop the ability to differentiate between variable and fixed overhead variances.

Understand and apply the concepts of standard cost systems.

Analyze and record the impact of manufacturing overhead cost on financial statements.

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Definitions:

Securities Exchange Act

A U.S. law enacted in 1934 that governs the trading of securities, such as stocks and bonds, aimed at protecting investors and maintaining fair markets.

Register Securities

The process of filing securities with the appropriate regulatory body, providing necessary information before they can be legally sold to the public.

Federal Registration Requirement

Federal Registration Requirement mandates that certain securities and financial transactions must be registered with a governmental body, typically to ensure transparency and protect investors.

State Registration Requirement

Legal stipulation that mandates entities or individuals to register with state authorities for conducting certain activities.