Question

  

Mr. R owns 60 of the 100 outstanding shares of B Corp., while the remaining shares are owned by unrelated parties. He also owns 80 of the 100 outstanding shares of S Corp. During the year, R sold 40 shares of B to S for $30,000. In applying the rules governing redemptions through related corporations, what are the critical pre- and post-redemption ownerships interests?60% and 40%

60% and 52%

80% and 40%

80% and 52%

60 and 52. 60 before as sole owner. Then 20 and 32. (80 percent of 40 shares)

Baxter died this year with an adjusted gross estate of $2,000,000, consisting primarily of stock in his family owned corporation. A redemption of the estate's stock will qualify for redemption treatment under Section 303 if Baxter's interest in the corporation is at least what percentage of his adjusted gross estate?20%

25%

30%

35%

Twelve years ago, F persuaded his daughter to join the family business by giving her 40% of the stock. He has retained the remaining 60% until now to ensure control. F Now wished to turn the business over to his daughter. Which of the following is true concerning a redemption of all of F's shares?

F's redemption is essentially not equivalent to a dividend

F's redemption will qualify as a partial liquidation.

F's redemption will qualify for a complete termination of interest

F must waive family attribution to qualify for sale treatment

Scott transferred a building with an adjusted basis of $50,000 and a FMV of $67,000 to J Corp. Scott received 90% of the outstanding stock of J with a FMV of $65,000, plus $2,000 cash. What amount will J Corp show as its basis in the building it receives?$50,000

$52,000 

$65,000 

$67,000 

A stock just paid a dividend of $1. The required rate of return is rs = 11%, and the constant growth rate is 5%. What is the stock price three years from now?

• A stock is expected to pay a dividend of $1 at the end of the year. The required rate of return is rs = 11%, and the expected constant growth rate is 5%. What is the current stock price?

• Warr Corporation just paid a dividend of $2 a share. The dividend is expected to grow at a constant rate of 5% a year. What is the expected dividend per share two years from now?

• Conner Corporation has a stock price of $32.35 per share. The last dividend (D0) was $3.42. The long-run growth rate for the company is a constant 7%. What is the company’s capital gains yield and dividend yield?

• If D1 = $2.00, g (which is constant) = 6%, and P0 = $40, what is the stock’s expected total return for the coming year?

• If D0 = $2.00, g (which is constant) = 6%, and P0 = $40, what is the stock’s expected total return for the coming year?

• Lamonica Motors just reported EPS of $2.00. The average company in the industry has a P/E ratio of 15. What is Lamonica Motors' price according to the P/E multiple approach?

Your client, Al, transfers property into a trust, providing for permissible income and principal distribution to his children, Albert and Bruce, and his grandson, Wayne. The trust provides that on the last death of Albert and Bruce, the corpus will be distributed to Wayne. In what situation would there be a generation-skipping transfer while either Albert or Bruce is alive?Distributions made to Albert and Bruce only

Distributions made to Albert and Wayne only

Distributions made to Albert only

Distributions made to Bruce only

Henry's will creates a non-marital trust, providing income to his spouse for life with the remainder to his son on the death of his wife. After receiving income from the trust for the rest of her life, the spouse dies. When the spouse dies, the remainder goes to the son. At the transfer, which kind of generation-skipping transfer (GST) event occurs?A direct skip occurs

A taxable distribution occurs

A taxable termination occurs

No GST event occurs