18. Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation’s stock. Hermione contributed a building and land with the following fair
18. Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation’s stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation’s stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.)
|
|
FMV |
Adjusted Tax Basis |
|
Building |
$ 75,000 |
$ 20,000 |
|
Land |
175,000 |
80,000 |
|
Total |
$ 250,000 |
$ 100,000 |
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
What is Hermione’s tax basis in the stock she receives in return for her contribution of property to the corporation?
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