Ann and Bob form Robin Corporation. Ann transfers property worth $420,000(basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 sharesfor property worth $165,000 (basis of $30,000) and for legal services (worth $15,000) inorganizing the corporation.ationsWhat gain or income, if any, will the parties recognize on the transfer?b. What basis do Ann and Bob have in the Robin Corporation stock?What is Robin Corporation's basis in the property and services it received fromAnn and Bob?a.C.

Financial Management: Financial management comprises of two words i.e. Finance and management.…

Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $165,000 (basis of $30,000) and for legal services (worth $15,000) in organizing the corporation. tions a. What gain or income, if any, will the parties recognize on the transfer? b. What basis do Ann and Bob have in the Robin Corporation stock? What is Robin Corporation's basis in the property and services it received from C. Ann and Bob?

Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $165,000 (basis of $30,000) and for legal services (worth $15,000) in organizing the corporation. tions a. What gain or income, if any, will the parties recognize on the transfer? b. What basis do Ann and Bob have in the Robin Corporation stock? What is Robin Corporation's basis in the property and services it received from C. Ann and Bob?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

In the current year, Tom , Jay , and Dana form Ares Corporation. Tom contributes land (a capital asset) having a $62,500 FMV (fair market value) in exchange for 165 shares of stock. He purchased the land three years ago for $65,000. Jay contributes machinery (Sec. 1231 property purchased four years ago) having a $115,000 adjusted basis and a $37,500 FMV in exchange for 105 shares of Ares stock. Dana contributes services worth $25,000 in exchange for 60 shares of Ares stock.
In the current year, Mary entered in to the following separate independent transactions: a) Mary sold shares of a public corporation to her husband. The shares, which had a value of $10,000 at the time of the sale, originally cost $4,000. Mary sold them to her husband for $7,000 in cash. During 2020, Mary’s husband received dividends of $500 on these shares. In January 2021, Mary’s husband sold the shares. Assume the couple do not elect out of the 73(1) rollover. b) Mary transferred shares of a public corporation with a fair market value of $8,000 to her RRSP. The shares originally cost $10,000 when first purchased by Mary. Required: (a) Describe the tax consequences, in detail, of these transactions for Mary, and her husband in 2020 and 2021.
On January 1, 2020, Mary and Jack form a partnership. Mary contributes $50,000 cash in exchange for a 50% interest. Jack contributes property with a tax basis of $70,000 and a fair market value of $50,000 in exchange for a 50% interest. Jack purchased the property on July 1, 2010. Does Mary or Jack need to recognize any gain/loss on their contributions?
Kim is an employee of Azure Corporation. In the current year, she receives a cash salary of $106,200 and also is given 45 shares of Azure stock for services she renders to the corporation. The shares in Azure Corporation are worth $2,500 each. a. How will the transfer of the 45 shares to Kim be handled for tax purposes? Kim's basis in the stock is $fill in the blank 2 ______? b. What is Azure Corporation's total compensation deduction for Kim's services?$fill in the blank 3 _________?
María and Bob form Robin Corporation. María transfers property worth $420,000 (basis of $150,000) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $15,000 (basis of $3,000) and for legal services (worth $165,000) in organizing the corporation. a. What gain or income, if any, will the parties recognize on the transfer? María recognizes no gain or loss X of $ a gift X of $ 165,000 ✓. b. What basis do María María has a basis of $ 0 X and Bob recognizes a gain and Bob have in the Robin Corporation stock? 150,000 X, while Bob has a basis of $ 45,000 X in the stock. ✓of $ c. What is Robin Corporation's basis in the property and services it received from María and Bob? Robin Corporation has a basis of $ Bob transferred. 150,000 X in the property María transferred and a basis of $ 15,000 X and has 30,000 X in the property
In 2020, Martin and Rebecca formed White Corporation. Martin transfers real estate with an adjusted basis of $260,000 and a fair market value of $350,000 to the newly formed White Corporation in exchange for 75% of the common stock of White Corporation. The real estate was encumbered by a mortgage of $275,000 which White Corporation assumed. Rebecca contributed equipment with a fair market value of $35,000 and an adjusted basis of $15,000 in exchange for 25% of the common stock and a $10,000 bond. What is the amount of gain or loss realized and recognized by Martin on the transfer of the real estate? What basis does Martin take in White Corporation stock? What basis does White Corporation take in the real estate contributed by Martin? What is the amount of gain or loss realized and recognized by Rebecca on the transfer of the equipment? What basis does Rebecca take in White Corporation stock? What basis does White Corporation take in the equipment contributed by Rebecca?
Bob and Steve form S corporation with Bob contributing land with a basis of $1,000 and fair market value of $4,000 in exchange for 40% of the stock and Steve contributing cash of $6,000 in exchange for 60% of the stock. They properly make the election under subchapter S of the Code to tax the corporation as an S corporation. During year 1 of operations, the corporation earns $10,000 of net profit, which consists of net ordinary income of $8,000 plus $2,000 of capital gain. During the year, the corporation distributes of $6,000 to shareholders. What is Bob’s adjusted basis in his stock of S corporation at the end of year 1?
Q.98. Smith and Jones create SJ Corporation. Smith contributes property with a fair market value of $80,000, and Jones contributes cash of $70,000. Each receives a 50% share in the corporation, and the corporation is valued at $140,000 immediately after the formation. Smith's property has an adjusted basis of $25,000, and is subject to a $10,000 mortgage, which is assumed by the company. What gain will Smith recognize in this situation? A. $0 B. $10,000 C. $15,000 D. $25,000
Robert and Lori (Robert’s sister) own all of the stock in Swan Corporation (E & P of $1,000,000). Each owns 500 shares and has a basis of $85,000 in the shares. Robert wants to sell his stock for $600,000, the fair market value, but he will continue to be employed as an officer of Swan Corporation after the sale. Lori would like to purchase Robert’s shares, becoming the sole shareholder in Swan, but Lori is short of funds. What are the tax consequences to Robert, Lori, and Swan Corporation under the following circumstances? Swan Corporation distributes cash of $600,000 to Lori, and she uses the cash to purchase Robert’s shares. Swan Corporation redeems all of Robert’s shares for $600,000.
Tony Smith and Bill Jones buy property for $500,000. Tony and Bill organize a corporation when the property has a fair market value of $700,000. They transfer the property to the corporation for all its authorized capital stock, which has a par value of $700,000. What amount of gain is recognized by Tony? A. $0 B. $250,000 C. $500,000 D. $700,000
Which of the following is true with respect to the related party rules? a.A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party. b.Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return. c.A taxpayer's uncle is a related party for purposes of Section 267. d.Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder. e.None of these choices are correct.
Henry transfers property with an adjusted basis of $95,000 and an FMV of $100,000 to a newly formed corporation in a Sec. 351 exchange. Henry receives stock with an FMV of $85,000 and a short-term note with a $15,000 FMV. Henry's basis in the stock is A. $90,000. B. $85,000. C. $100,000. D. $95,000.