On January 7, 2021, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 $597,200 $716,640 $119,440 Property 2 $1,015,240 $776,360 ($238,880) Net built-in loss ($119,440) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $656,920. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2021. Martin's basis is Property 1 is a basis of $ Martin's basis in Property 2 is a basis of $ b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $

On January 7, 2021, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 $597,200 $716,640 $119,440 Property 2 $1,015,240 $776,360 ($238,880) Net built-in loss ($119,440) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 30% shareholder when the property is worth $656,920. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2021. Martin's basis is Property 1 is a basis of $ Martin's basis in Property 2 is a basis of $ b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $

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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Father Corporation (FC) acquires 20% ownership interest in Son Corporation (SC) on January 1, 202X, for P1,750,000 cash, which is the fair value of the investment at that date. FC has concluded that it does not have a significant influence over SC. At the same date, the fair and carrying values of SC’s identifiable assets is P5,000,000 and P3,000,000. The identifiable assets include land, which has fair and carrying values of P4,000,000 and P3,000,000, respectively. For the year ended December 31, 202X, SC reported a profit of P3,000,000 but did not pay any dividends. Moreover, the fair value of SC’s land increases by P1,500,000. However, the carrying amount of the land remains unchanged at P3,000,000. Given below is the Statement of Financial Position (SFP) of SC, together with the fair values of the identifiable assets, at December 31, 202X: Carrying Amount Fair Value Cash and Receivables 4,000,000 4,000,000 Land 3,000,000 5,500,000…
On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange for stock in a transaction that qualifies under § 351. The shareholder's basis, the fair market value, and the built-in gain (loss) of each property are: Shareholder's Fair Market Built in Gain Basis Value or (Loss) Property 1 $471,800 $566,160 $94,360 Property 2 $802,060 $613,340 ($188,720) Net built-in loss ($94,360) Martin adopts a plan of liquidation later in the year and distributes Property 2 to a 45% shareholder when the property is worth $518,980. a. Compute Martin's basis in Property 1 and in Property 2 as of January 7, 2022. Martin's basis is Property 1 is a Martin's basis in Property 2 is a basis of $ basis of $ b. Compute Martin's realized and recognized loss on the liquidating distribution of Property 2. Martin has a realized loss of $ and a recognized loss of $
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