X, which has been a calendar year S corporation since its initial formation, is owned...
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Accounting
X, which has been a calendar year S corporation since its initial formation, is owned equally by A, B and C. On December 31, 20X1, X has the following balance sheet:
Asset
AB
FMV
Shareholders
AB
FMV
Cash
200,000
200,000
A
200,000
200,000
Stock A
260,000
200,000
B
140,000
200,000
Stock B
80,000
200,000
C
200,000
200,000
Totals
540,000
600,000
540,000
600,000
Question #1: What is the effect on all shareholders if on December 31, 20X1, X redeems Bs interest by distributing Stock A to him?
Question#2: What is the effect on all shareholders if on December 31, 20X1, X redeems B's interest by distributing 1/2 of the Stock A and 1/2 of the stock of B to him?
Question #3: What is the effect on all shareholders if on December 31, 20X1, X liquidates and distributes cash of $200,000 to A, stock of A to B and Stock of B to C?
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