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 Alpha Beta Corporation. The Alpha Beta Corporation will assume the mortgage on the building. As part of the same transaction, Alfie contributed to Alpha Beta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of Alpha Beta 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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Betty contributed to Alpha Beta 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 Alpha Beta Corporation. The Alpha Beta Corporation will assume the
mortgage on the building. As part of the same transaction, Alfie contributed to Alpha
Beta Corporation cash of $30,000 in exchange for the other 50 percent of the voting
common stock of Alpha Beta 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:Betty contributed to Alpha Beta 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 Alpha Beta Corporation. The Alpha Beta Corporation will assume the mortgage on the building. As part of the same transaction, Alfie contributed to Alpha Beta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of Alpha Beta 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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