FINANCE 4320 Practice Exam 2 Questions & Answers Latest Graded
FINANCE 4320 Practice Exam 2 Questions & Answers Latest Graded Question 1 3.33333 out of 3.33333 points Cardinal, the parent corporation, has a basis of $440,000 in the stock of Vulture Corporation, a subsidiary in which it owns 90% of all classes of stock. Cardinal purchased the stock in Vulture Corporation 10 years ago. In the current year, Cardinal Corporation liquidates Vulture Corporation and acquires assets worth $500,000 with a tax basis to Vulture Corporation of $380,000. What basis will Cardinal Corporation have in the assets acquired from Vulture Corporation? (Ch6 L4 Pg2) Selected Answer: $380,00 0. Answers: $380,00 0. $500,00 0. $ - 0-. $440,00 0. Response Feedback: Unless a parent corporation elects under Section 338, property received by the parent corporation in a complete liquidation of its subsidiary under Section 332 has the same basis it had in the hands of the subsidiary. The parent's basis in stock of the liquidated subsidiary disappears. Example 39 Question 2 3.33333 out of 3.33333 points What amount of accumulated earnings of a manufacturing corporation is considered within the reasonable needs of a business without the corporation having to show a bona fide business reason for the accumulation? (Ch3 L1 Pg15) Selected Answer: $250,000 or less. Answers: $250,000 or less. $300,000 or less. $200,000 or less
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