Business, 31.05.2021 21:10 jasminechambers642

Hurricane, Inc., is an S corporation. Orleans, Inc., wants to acquire Hurricane for cash. Hurricane's shareholders have a tax basis in their stock of $3,000, and Hurricane has assets with a net tax basis of $3,000 (cost = $4,500, accumulated depreciation = $1,500). Hurrican has no liablities. Assume the transaction can be structured one of two ways: Option 1: As a taxable stock acquistion without Section 338(h)(10) election
Option 2: As a taxable stock acquistion with a Section 338 (h)(10) election

Further assume that Orleans is willing to pay $5,000 to aquire Hurrican under either structure, and that all depreciation claimed to date must be captured to the extent of the purchase price. Assume that all recaptured depreciation is taxed at the highest ordinary income rate and that no additional taxes will apply in an asset sale due to Tax Code restrictions relating to S corporations.

Required:
a. How much cash after tax will Hurricane's shareholders have under Option 1?
b. How much cash after tax will Hurricane's shareholders have under Option 2?

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 15:30

Walter wants to deposit $1,500 into a certificate of deposit at the end of each ofthe next 6 years. the deposits will earn 5 percent compound annual interest. ifwalter follows through with his plan, approximately how much will be in his accountimmediately after the sixth deposit is made?

Answers: 1

Answer

Business, 22.06.2019 08:00

Why do police officers get paid less than professional baseball players?

Answers: 2

Answer

Business, 22.06.2019 12:10

This exercise illustrates that poor quality can affect schedules and costs. a manufacturing process has 130 customer orders to fill. each order requires one component part that is purchased from a supplier. however, typically, 3% of the components are identified as defective, and the components can be assumed to be independent. (a) if the manufacturer stocks 130 components, what is the probability that the 130 orders can be filled without reordering components? (b) if the manufacturer stocks 132 components, what is the probability that the 130 orders can be filled without reordering components? (c) if the manufacturer stocks 135 components, what is the probability that the 130 orders can be filled without reordering components?

Answers: 3

Answer

Business, 23.06.2019 00:00

Winston churchill's stamp collection was valued at $14 million when he died. at auction, it brought in only $4 million. what was it worth? why?

Answers: 3

Answer

You know the right answer?

Hurricane, Inc., is an S corporation. Orleans, Inc., wants to acquire Hurricane for cash. Hurricane'...

Questions