1 Betty contributed to AlphaBeta Corporation a building with an adjusted basis to Betty of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for 50 percent of the voting common stock (the only class of stock) of the AlphaBeta Corporation. The AlphaBeta Corporation will assume the mortgage on the building. As part of the same transaction, Alfie contributed to AlphaBeta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of AlphaBeta Corporation. How much gain or loss, if any, does Betty recognize with respect to this transaction? a. $0. b. $10,000. c. $70,000. d. $100,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1 Betty contributed to AlphaBeta Corporation a building with an
adjusted basis to Betty of $50,000 and a fair market value of
$150,000 that was subject to a mortgage of $120,000 in
exchange for 50 percent of the voting common stock (the only
class of stock) of the AlphaBeta Corporation. The AlphaBeta
Corporation will assume the mortgage on the building. As
part of the same transaction, Alfie contributed to AlphaBeta
Corporation cash of $30,000 in exchange for the other 50
percent of the voting common stock of AlphaBeta
Corporation. How much gain or loss, if any, does Betty
recognize with respect to this transaction?
a. $0.
b. $10,000.
c. $70,000.
d. $100,000.
Transcribed Image Text:1 Betty contributed to AlphaBeta Corporation a building with an adjusted basis to Betty of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for 50 percent of the voting common stock (the only class of stock) of the AlphaBeta Corporation. The AlphaBeta Corporation will assume the mortgage on the building. As part of the same transaction, Alfie contributed to AlphaBeta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of AlphaBeta Corporation. How much gain or loss, if any, does Betty recognize with respect to this transaction? a. $0. b. $10,000. c. $70,000. d. $100,000.
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