8. LO.1 On January 7, 2022, Martin Corporation acquires two properties from a shareholdersolely in exchange for stock in a transaction that qualifies under § 351. The share-holder's basis, the fair market value, and the built-in gain (loss) of each property are:Shareholder's Basis Fair Market ValueProperty 1Property 2$300,000525,000Net built-in loss$375,000400,000Built-In Gain (Loss)$ 75,000(125,000)($ 50,000)Martin adopts a plan of liquidation later in the year and distributes Property 2 to a30% shareholder when the property is worth $350,000.a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022.b. Compute Martin's realized and recognized loss on the liquidating distributionof Property 2.

change for stock in a transaction that qualifies under § 351. The fair market value, and the built-in gain (loss) of each property Shareholder's Basis Fair Market Value Built-In Gain (Loss) $300,000 525,000 $375,000 400,000 $ 75,000 (125,000) ($ 50,000) plan of liquidation later in the year and distributes Property when the property is worth $350,000. artin's basis in Property 1 and in Property 2 as of January 7,

change for stock in a transaction that qualifies under § 351. The fair market value, and the built-in gain (loss) of each property Shareholder's Basis Fair Market Value Built-In Gain (Loss) $300,000 525,000 $375,000 400,000 $ 75,000 (125,000) ($ 50,000) plan of liquidation later in the year and distributes Property when the property is worth $350,000. artin's basis in Property 1 and in Property 2 as of January 7,

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 a qualified 351 transaction, Clara transfer the following assets to Columbia corporation in exchange for 100 % of its stock: transfer property adjusted basis fair market value building 100,000 90,000 land 300,000 800,000 equipment 150,000 100,000 What are Columbia basis in the land, building, and equipment?
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted bases: FMV Adjusted Basis 60,000 $ 30,000 Inventory Building Land Total 450,000 690,000 $1,200,000 300,000 900,000 $1,230,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,100,000. The transaction met the requirements to be tax-deferred under $351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000. e. How…
Reyes Corp. owned 70% of the voting common stock of Lee Co. During 2021, Lee sold a parcel of land to Reyes. The land had a book value of $87,000 and was sold to Reyes for $138,000. Lee's reported net income for 2021 was $127,000. Required: Assuming there are no other intra-entity transactions nor excess amortizations, what was the net income attributable to the noncontrolling interest of Lee? Due to the sale of land being an upstream sale, and not sold to an external entity the Gain would be deferred each year.
Blue Corp. purchased 100% of the stock of Magenta Corp. in 1984 for $300,000. Early this year, Magenta was liquidated. Blue Corp. received all of Magenta’s assets, which had a basis to Magenta Corp. of $420,000 and a FMV of $440,000. Assume the requirements of §332 were satisfied. What about of gain will Blue Corp. recognize any gain as a result of the liquidation?
Required Information Problem 18-67 (LO 18-5) (Algo) [The following information applies to the questions displayed below] Nall Corporation made a distribution of $613,760 to Rusty in partial liquidation of the company on December 31 of this year. Rusty, an Individual, owns 100 percent of Nall Corporation. The distribution was in exchange for 50 percent of Rusty's stock in the company. At the time of the distribution, the shares had a fair market value of $224 per share. Rusty's tax basis in the shares was $50 per share Nail had total E&P of $8,185.000 at the time of the distribution. Problem 18-67 Part a (Algo) a. What are the amount and character (capital gain or dividend) of any income or gain recognized by Rusty because of the partial liquidation? per share
For which of the corporate distributions listed below may loss be recognized? Question options: A dividend of property with a basis of $500,000 and a value of $450,000 Securities with a value of $500,000 and a basis of $550,000 distributed to its shareholders pro-rata as part of a complete liquidation; the securities were bought by the corporation three years ago with internal funds. Land with a value of $400,000 and a basis of $470,000 distributed to a 70% shareholder pursuant to a complete liquidation; the land was contributed by the same shareholder 20 months before the liquidation
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted bases: FMV Adjusted Basis Inventory $ 60,000 $ 30,000 Building 450,000 300,000 Land 690,000 900,000 Total $ 1,200,000 $ 1,230,000 Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000. What is the corporation’s adjusted basis in each of the assets received in the exchange?(Do not round intermediate calculations.)
My question is on the image thanks.
Lump-Sum Liquidation with Gain on Realization
Red Blossom Corporation transferred its 40 percent interest to Tea Company as part of a complete liquidation of the company. In the exchange, Red Blossom received land with a fair market value of $617,500. The corporation's basis in the Tea Company stock was $407,500. The land had a basis to Tea Company of $682,500. What amount of gain does Red Blossom recognize in the exchange and what is its basis in the land it receives? Multiple Choice $210,000 gain recognized and a basis in the land of $682,500. $210,000 gain recognized and a basis in the land of $617,500. No gain recognized and a basis in the land of $682,500. No gain recognized and a basis in the land of $275,00.
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted bases: Inventory Building Land Total FMV 88,000 660,000 1,012,000 $1,760,000 $ Adjusted Basis 44,000 440,000 1,320,000 $1,804,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,660,000. The transaction met the requirements to be tax-deferred under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)