e. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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[The following information applies to the questions displayed below.]
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.)
Building
Land
Total
FMV
$ 75,000
175,000
$ 250,000
Adjusted Tax
Basis
$ 20,000
80,000
$ 100,000
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
Adjusted tax basis
e. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione?
Land
Building
Transcribed Image Text:! Required information [The following information applies to the questions displayed below.] 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.) Building Land Total FMV $ 75,000 175,000 $ 250,000 Adjusted Tax Basis $ 20,000 80,000 $ 100,000 To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. Adjusted tax basis e. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione? Land Building
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