Exercise 18-21 (Algorithmic) (LO. 1, 2, 3) Jocelyn contributes land with a basis of $63,500 and fair market value of $95,250 and inventory with a basis of $15,400 and fair market value of $23,100 in exchange for 100% of Zion Corporation stock. The land is subject to a $15,875 mortgage. Determine Jocelyn's recognized gain or loss and the basis in the Zion stock received. If an amount is zero, enter "0". The exchange is ✓tax-free under § 351 because the release of a liability is not boot under § 357(a). As a result, Jocelyn has income of 95,250 X and a basis: treated X in
Exercise 18-21 (Algorithmic) (LO. 1, 2, 3) Jocelyn contributes land with a basis of $63,500 and fair market value of $95,250 and inventory with a basis of $15,400 and fair market value of $23,100 in exchange for 100% of Zion Corporation stock. The land is subject to a $15,875 mortgage. Determine Jocelyn's recognized gain or loss and the basis in the Zion stock received. If an amount is zero, enter "0". The exchange is ✓tax-free under § 351 because the release of a liability is not boot under § 357(a). As a result, Jocelyn has income of 95,250 X and a basis: treated X in
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Exercise 18-21 (Algorithmic) (LO. 1, 2, 3)
Jocelyn contributes land with a basis of $63,500 and fair market value of $95,250 and inventory with a
basis of $15,400 and fair market value of $23,100 in exchange for 100% of Zion Corporation stock. The
land is subject to a $15,875 mortgage.
Determine Jocelyn's recognized gain or loss and the basis in the Zion stock received.
If an amount is zero, enter "0".
The exchange is ✔tax-free under § 351 because the release of a liability is not
boot under
§ 357(a). As a result, Jocelyn has income of
stock.
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95,250 X and a basis $
treated as
X in her
Generally, when liabilities are assumed by another party, the party who is relieved of the debt is trea
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