2 A transfers land to Newco in exchange for 100% of Newco's stock. The land has a basis of $50, FMV of S100 and is subject to a mortgage of S40. a What are the consequences to each of the parties? b. Suppose in that the mortgage was placed on the property immediately before the transfer to Newco. A wanted cash in order to buy a yacht to be used for personal purposes, so he took out a mortgage on the land. Would this change your answer?

2 A transfers land to Newco in exchange for 100% of Newco's stock. The land has a basis of $50, FMV of S100 and is subject to a mortgage of S40. a What are the consequences to each of the parties? b. Suppose in that the mortgage was placed on the property immediately before the transfer to Newco. A wanted cash in order to buy a yacht to be used for personal purposes, so he took out a mortgage on the land. Would this change your answer?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter14: Property Transactions: Determination Of Gain Or Loss And Basis Considerations

Section: Chapter Questions

Problem 6DQ

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2 A transfers land to Newco in exchange for 100% of Newco's stock. The land has a basis of $50, FMV of S100 and is subject to a mortgage of $40. a. What are the consequences to each of the parties? b. Suppose in that the mortgage was placed on the property immediately before the transfer to Newco. A wanted cash in order to buy a yacht to be used for personal purposes, so he took out a mortgage on the land. Would this change your answer? c Suppose instead that the mortgage was for $60. Suppose further that this mortgage was incurred on the purchase of the property many years ago. Would this change your answer? d. Same as (c) except that A also transfers accounts payable of $10. A is a cash basis taxpayer. How would this change your answer?
2 A transfers land to Newco in exchange for 100% of Newco's stock. The land has a basis of $50, FMV of S100 and is subject to a mortgage of $40. b. Suppose in that the mortgage was placed on the property immediately before the transfer to Newco. A wanted cash in order to buy a yacht to be used for personal purposes, so he took out a mortgage on the land. Would this change your answer?
3. Jose obtained a loan from Pedro amounting to PhP1 Million. As a security, Jose mortgaged his land (with a fair market value of PhP700,000.00) to Pedro. Subsequently, Jose sold the land to Mario. What is the effect of the sale of the land to the obligation of Jose to Pedro? Assuming Jose could not pay his obligation, what are the remedies of Pedro? Explain your answer.
Michael transfers $20,000 cash and land to XYZ, Inc. in exchange for all of its stock. The land has a $140,000 adjusted basis and a fair market value of $250,000 immediately before the exchange. XYZ, Inc assumes a $200,000 mortgage on the land for a valid business purpose. Now answer the following questions. 1. What, if anything, must Michael recognize on this exchange? 2. What is Michael’s basis in the stock?
1. Joe owns a farm with a basis of $250,000 and a fair market value of $550,000. Willy owns an apartment building with a fair market value of $100,000 and a basis of $300,000. They exchange properties. In addition, Willy gives Joe $450,000 in cash. a. What are Joe's and Willy's realized gain and losses on the transaction? b. What amounts of gain or loss do they recognize on the transaction? c. What is the basis of the property received by Joe? Willy?
Joe buys a piece of land on January 3rd of the current year. He pays $10,000 in cash. 1) Suppose instead the land is subject to a mortgage of $3,000 and Joe receives$12,000 in cash and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so how much is it? 2) Suppose Joe instead received a piece of jewelry worth $12,000 and the buyer assumes Joe’s mortgage on the land. Does Joe realize a gain or loss and if so, how much is it? note: if you can't answer both, please answer question number 2
5. (a) A transfers a contract to perform services to Newco in exchange for 50% of Newco's stock. B transfers a tract of land with a basis of 50 and FMV of 100 in exchange for 50% of Newco's stock. What are the tax consequences to all of the parties? (b) Suppose that in addition to transferring the services contract, A transfers cash of 20. A still receives 50% of the stock. How would this change your answer?
Maud exchanges a rental house at the beach with an adjusted basis of $225,000 and a fair market value of $200,000 for a rental house at the mountains with a fair market value of $180,000 and cash of $20,000. What is the recognized gain or loss? a. ($20,000) b. ($25,000) c. None of these d. $20,000 e. $0
5. (a) A transfers a contract to perform services to Newco in exchange for 50% of Newco's stock. B transfers a tract of land with a basis of 50 and FMV of 100 in exchange for 50% of Newco's stock. What are the tax consequences to all of the parties? (b) Suppose that in addition to transferring the services contract, A transfers cash of 20. A still receives 5096 of the stock. How would this change your answer? () Suppose instead that in addition to transferring the services contract, A transfers cash of just 1 How would this change your answer?
Your client has a real estate asset used in his business. He exchanges it for a like-kind real estate asset owned by Ava. The basis of your client's asset is $50,000 and he gives Ava $25,000 cash plus the asset in exchange for Ava's asset, which is worth $40,000. Ava's basis in her original asset is $9,000. What is Ava's gain or loss? A. $25,000 gain recognized. $31,000 gain realized and recognized. C. $0 gain recognized. D. $0 loss recognized.
1 Suppose the taxpayer originally purchased the machinery by paying $12,000 in cash and giving the seller a note for $12,000. When she sold it she received $38,000 in cash and the buyer assumed the $12.000 note. a. What is the amount realized? b. What is the adijusted basis of the machinery? c. What is the gain on the sale of the machinery?
True or False. What's the answer for this? S1 - Seller sold land classified as capital asset to Buyer. Seller paid the 6% capital gains tax and handed the CGT return to Buyer. In this case, Buyer can successfully ask the register of deeds to transfer the tile of the land to his name. S2 - Mortgagee-creditor foreclosed the real estate mortgage over land (capital asset) executed by mortgagor-debtor. Mortgagee-creditor is the highest bidder and paid P1,000,000. Within 1 year, mortgagor exercised his right of redemption. In this case, mortgagor-debtor is not subject to capital gains tax.