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Jane owns $150$ of the $200$ outstanding shares of Parent

Corporation stock. Parent owns $160$ of the $200$ outstanding shares of Subsidiary Corporation

stock. Jane sells $50$ shares of her Parent stock to Subsidiary for $$40,000.$ Jane$$s basis in her

Parent shares is $$15,000($$$100$ per share$).$ At the end of the year of sale, Subsidiary and

Parent have E&P of $$60,000$ and $$25,000,$ respectively.

a$.$ What are the amount and character of Jane$$s recognized gain or loss on the sale?

b$.$ What is Jane$$s basis in her remaining shares of Parent stock?

c$.$ How does the sale affect the E&P of Parent and Subsidiary?

d$.$ What basis does Subsidiary take in the Parent shares it purchases?

e$.$ How would your answer to Part a change if Jane instead sells $100$ of her Parent shares to

Subsidiary for $$80,000?$Jane owns $150$ of the $200$ outstanding shares of Parent

Corporation stock. Parent owns $160$ of the $200$ outstanding shares of Subsidiary Corporation

stock. Jane sells $50$ shares of her Parent stock to Subsidiary for $$40,000.$ Jane$$s basis in her

Parent shares is $$15,000($$$100$ per share$).$ At the end of the year of sale, Subsidiary and

Parent have E&P of $$60,000$ and $$25,000,$ respectively.

a$.$ What are the amount and character of Jane$$s recognized gain or loss on the sale?

b$.$ What is Jane$$s basis in her remaining shares of Parent stock?

c$.$ How does the sale affect the E&P of Parent and Subsidiary?

d$.$ What basis does Subsidiary take in the Parent shares it purchases?

e$.$ How would your answer to Part a change if Jane instead sells $100$ of her Parent shares to

Subsidiary for $$80,000?$Jane owns $150$ of the $200$ outstanding shares of Parent

Corporation stock. Parent owns $160$ of the $200$ outstanding shares of Subsidiary Corporation

stock. Jane sells $50$ shares of her Parent stock to Subsidiary for $$40,000.$ Jane$$s basis in her

Parent shares is $$15,000($$$100$ per share$).$ At the end of the year of sale, Subsidiary and

Parent have E&P of $$60,000$ and $$25,000,$ respectively.

a$.$ What are the amount and character of Jane$$s recognized gain or loss on the sale?

b$.$ What is Jane$$s basis in her remaining shares of Parent stock?

c$.$ How does the sale affect the E&P of Parent and Subsidiary?

d$.$ What basis does Subsidiary take in the Parent shares it purchases?

e$.$ How would your answer to Part a change if Jane instead sells $100$ of her Parent shares to

Subsidiary for $$80,000?$

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