FMV $78,750 183,750 $ 262,500 Adjusted Tax Basis $ 21,000 84,000 $ 105,000 ne exchange, Wiley Corporation
FMV $78,750 183,750 $ 262,500 Adjusted Tax Basis $ 21,000 84,000 $ 105,000 ne exchange, Wiley Corporation
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the questions displayed below.]
Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $210,000 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:
Building
Land
Total
FMV
$ 78,750
183,750
$ 262,500
To equalize the exchange, Wiley Corporation paid Hermione $52,500 in addition to her stock.
Gain or loss realized
Gain or loss recognized
a. What amount of gain or loss does Ramona realize on the formation of the corporation? What amount, if any, does Ramona
recognize?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
Adjusted Tax
Basis
$ 21,000
84,000
$ 105,000
$
$
78,750
52,500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F082493d0-a1a0-4092-91a7-91750435763d%2F27459a6a-65b6-4ac3-baba-be6f9e5c6608%2F2x3n8nl_processed.png&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $210,000 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:
Building
Land
Total
FMV
$ 78,750
183,750
$ 262,500
To equalize the exchange, Wiley Corporation paid Hermione $52,500 in addition to her stock.
Gain or loss realized
Gain or loss recognized
a. What amount of gain or loss does Ramona realize on the formation of the corporation? What amount, if any, does Ramona
recognize?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
Adjusted Tax
Basis
$ 21,000
84,000
$ 105,000
$
$
78,750
52,500
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