9.7 - Corporate Tax Special Topics - Subsidiary Liquidation

Question 1

Subsidiary Liquidation - Nonrecognition

True or False >>> both, the parent corporation and the controlled subsidiary recognized gains and losses on a liquidating distribution to the parent.

Answer 1

False – neither the parent corporation nor a controlled subsidiary recognizes gain or loss on a liquidating distribution to the parent

Question 2

Subsidiary Liquidation - Control

What does control mean?

Answer 2

The parent owns 80% or more of both the voting power and total value of the stock of the liquidating corporation

Question 3

Subsidiary Liquidation - Basis

How is basis in property distributed when the property is transferred to the parent?

Answer 3

The basis is distributed to the parent and basis in stock in the subsidiary disappears

Question 4

Subsidiary Liquidation - Liabilities

How are gains recognized on distributions that satisfy obligations of the subsidiary to the parent?

Answer 4

Gains are not recognized

Question 5

Do tax attributes of the subsidiary, such as NOLs and capital losses, carryover to the parent?

Answer 5

Yes