Computation of taxable gain Noah realizes and recognizes on the amounts received on the distribution of the assets from CAL INC in turn for his stock.
You can detail the computation of taxable gain Noah realizes and recognizes on the amounts received on the distribution of the assets from CAL INC in turn for his stock. The note comes with the land (Noah takes over the $1 Million loan). You then can compute the taxes Noah owes on the distribution. Note: first, you want to evaluate what cash CAL INC has left to transfer to Noah after paying tax on the above transfer.
Question on Tax Basis
What tax basis does Noah now have in the assets transferred to him from CAL INC?
Question on Tax Planning
We may wonder if any more favorable legal entities and corresponding tax entity may have worked better for Noah then forming the Corporation and then defaulting to c tax corporation. What do you suggest would have a better alternative in deal structure for holding the land at the time Noah formed CAL INC and why? Here, we are not saying Noah may have for sure made a mistake when he formed CAL INC as we are only looking from the issue in hindsight. I mean we are not sure what his plans were at this late date. Though, we are asking: given all the whole structure turned out and all the taxes Noah has to now pay and also given that he owns 100% of CAL INC and so those taxes really represent his taxes if we consider Noah and CAL INC as one equanimity entity:
Answer preview for computation of taxable gain Noah realizes and recognizes on the amounts received on the distribution of the assets from CAL INC in turn for his stock.
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