question archive Widget Corporation has 100 shares of voting common stock outstanding, which are owned 50 shares by Alexa (adjusted basis $200), 30 shares by Bernard (adjusted basis $400) and 20 shares by Curtis (adjusted basis $150)
Widget Corporation has 100 shares of voting common stock outstanding, which are owned 50 shares by Alexa (adjusted basis $200), 30 shares by Bernard (adjusted basis $400) and 20 shares by Curtis (adjusted basis $150)
Subject:LawPrice: Bought3
Widget Corporation has 100 shares of voting common stock outstanding, which are owned 50 shares by Alexa (adjusted basis $200), 30 shares by Bernard (adjusted basis $400) and 20 shares by Curtis (adjusted basis $150). Widget Corporation owns the following assets:
Basis FMV
Non-operating assets $200 $300
Operating assets $700 $900
Totals $900 $1,200
Widget owes $200 (in the form of 20-year bonds held by Ligget Corporation with an adjusted basis of $190) and has E&P of $200. Assume that each Widget share is worth $10 and that property exchanged therefor is worth $10. Assume that each transaction has a proper business purpose, there is a continuity of Widget's business enterprise, the transaction is pursuant to a plan of reorganization and the face amount of debt is its FMV. XYZ Corporation is a publicly held corporation whose stock is traded on the New York Stock Exchange (NYSE). What are the tax consequences to Alexa, Bernard, Curtis, Ligget Corporation and XYZ Corporation?
b. Assume instead that Widget is a public company, and that XYZ acquires 100% of Widget's stock by a public tender offer (cash) and immediately liquidates Widget.
