Roberts Inc. transferred all its assets to Acquisition Inc. for $300,000 worth of its voting preferred and $50,000 in cash to the sole shareholder (Ann) of Roberts Inc. Ann’s basis in her shares was $200,000. The assets transferred had a value of $370,000, a basis of $250,000 and were subject to a liability of $20,000. Roberts Inc. had an operating loss of $1 million. The long term tax exempt rate is 4%. Roberts liquidated and distributed the stock and cash to its shareholders.
a. Does the transaction qualify as a type C reorganization?
b. What is Robert’s realized and recognized gain?
c. What is Acquisition Inc.’s basis in the assets? What attributes carry over?
d. What is Ann’s realized and recognized gain and the basis in the boot and shares received?
e. Ann owns 30% in Acquisition Inc. is there a limitation on any attributes that carryover and by how much?