Mr. Boyd and Ms. Tuck decide to form a new corporation named BT Inc. Mr. Boyd transfers $20,000 cash, equipment (FMV $40,000; adjusted tax basis $41,500), and business inventory ($20,000 FMV; adjusted tax basis $12,000), and Ms. Tuck drafts the legal documents and designs the accounting system for B, valued at $20,000. BT issues 1,000 shares of common stock to its two shareholders. a) Determine BT Inc.’s book and tax basis in the inventory transferred by Mr. Boyd and the equipment transferred by Ms. Tuck b) and the book and tax basis of the services (before they are expensed/amortized as organization and startup costs) performed by Ms. Tuck.
Mr. Boyd and Ms. Tuck decide to form a new corporation named BT Inc. Mr. Boyd transfers $20,000 cash, equipment (FMV $40,000; adjusted tax basis $41,500), and business inventory ($20,000 FMV; adjusted tax basis $12,000), and Ms. Tuck drafts the legal documents and designs the accounting system for B, valued at $20,000. BT issues 1,000 shares of common stock to its two shareholders. a) Determine BT Inc.’s book and tax basis in the inventory transferred by Mr. Boyd and the equipment transferred by Ms. Tuck b) and the book and tax basis of the services (before they are expensed/amortized as organization and startup costs) performed by Ms. Tuck.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Mr. Boyd and Ms. Tuck decide to form a new corporation named BT Inc. Mr. Boyd transfers $20,000 cash, equipment (FMV $40,000; adjusted tax basis $41,500), and business inventory ($20,000 FMV; adjusted tax basis $12,000), and Ms. Tuck drafts the legal documents and designs the accounting system for B, valued at $20,000. BT issues 1,000 shares of common stock to its two shareholders.
a) Determine BT Inc.’s book and tax basis in the inventory transferred by Mr. Boyd and the equipment transferred by Ms. Tuck b) and the book and tax basis of the services (before they are expensed/amortized as organization and startup costs) performed by Ms. Tuck.
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