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Paul owns 75?% of Newbury Corporation stock in which he has a $210,000 adjusted basis....

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Question

Accounting

Paul owns 75?% of Newbury Corporation stock in which he has a $210,000 adjusted basis. Consider the following? situations:

a.

Paul is a cash method of accounting taxpayer.Newbury determines on December 24 of the current year that it will make a $240,000 liquidating distribution to Paul. Newbury pays the liquidating distribution on January 8 of the next year.

b.

 Assume the same facts as in Part a except that Paul is an accrual method of accounting taxpayer.

Requirement

For each? situation, what amount of? gain/loss will Paul report in the current? year? In the next? year?

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