Becker CPA Review 18-4Gearty and Olinto organized The Worthington Corp., which issued voting common stock with a fair market value of $240,000. They each transferred property in exchange for stock as follows: PropertyAdjustedBasisFair MarketValuePercentage of The WorthingtonCorp. Stock AcquiredGeartyBuilding$80,000$164,00060%OlintoLand 10,000 96,00040% The building was subject to a $20,000 mortgage that was assumed by The Worthington Corp. What amount of gain did Gearty recognize on the exchange?a.$0b.$20,000c.$84,000d.$104,000

When a group of persons formed a corporation and transfer their assets to corporation, it is…

Answered: Gearty and Olinto organized The…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Becker CPA Review 18-4

Gearty and Olinto organized The Worthington Corp., which issued voting common stock with a fair market value of $240,000. They each transferred property in exchange for stock as follows:

	Property	Adjusted Basis	Fair Market Value	Percentage of The Worthington Corp. Stock Acquired
Gearty	Building	$80,000	$164,000	60%
Olinto	Land	10,000	96,000	40%

The building was subject to a $20,000 mortgage that was assumed by The Worthington Corp. What amount of gain did Gearty recognize on the exchange?

a.$0

b.$20,000

c.$84,000

d.$104,000

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