owns an idle land worth 1M. X works in MCDO as an accounting manager. He decided to exchange the land to shares of stocks of MCDO, a domestic corp. for 10,000 shares with value of 1.2M. As a result, X obtains control, having 90% interest, in the corporation. What is the CGT?

owns an idle land worth 1M. X works in MCDO as an accounting manager. He decided to exchange the land to shares of stocks of MCDO, a domestic corp. for 10,000 shares with value of 1.2M. As a result, X obtains control, having 90% interest, in the corporation. What is the CGT?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Yang, Jane, and Li incorporated YJL Corp. Yang transferred equipment (FMV = $60,000, basis =…

A: Realized gain used to result from the sale of an asset at price, which is more than an original…

Q: Carl has a b

A: The income of the parent company does not include any income from its subsidiary company which shows…

Q: Yang, Jane, and Li incorporated YJL Corp. Yang transferred equipment (FMV = $60,000, basis =…

Q: Josiah has a broker

A: The deduction of interest on investment that is paid to broker depends on the income from the…

Q: Yang, Jane, and Li incorporated YJL Corp. Yang transferred equipment (FMV = $60,000, basis =…

A: The partnership has three partners with different levels of investment.

Q: Ahmad invested $3,000 and purchased shares of a German corporation when the exchange rate was $1.00…

A: Given: Purchased shares of German corporation =$3000 (when exchange rate was $$1.00 = €1.06)Sold…

Q: Banner and Strange are partners who have capital balances of P65,000 and P35,000 and share profits…

A: Given, (a) Banner's Capital = P 65,000 (b) Strange's Capital = P 35,000 (c) Total Capital prior to…

Q: Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the…

A: ANSWER General Rule under sec 351(a) : No gain or lossshall be recognized if the property is…

Q: Ron's basis in his stock is $4,000. The corporation has E&P of $5,000 and distributes $6,000 to Ron.…

A: Companies pay dividend out of its current profits and earning and accumulated (if any). Dividend…

Q: pte Mr. Neis, a resident alien, owns 40% of the shares of Coco Corporation, a resident corporation.…

A: Cash dividends received by an individual who is a resident alien of the Philippines are subject to a…

Q: A and B, both individuals, each owns 50 shares of X Corp. A and B have bases in theirX stock of 60…

Q: In Year 1 you invested $500,000 in exchange for a 15% partnership interest in ABC, LP. Here are some…

A: working : income of share 15% of business income 1. $3.4 million = ( $3.4 million *15%) = $510000…

Q: Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the…

A: ANSWER General Rule under sec 351(a) : No gain or lossshall be recognized if the property is…

Q: Q Ltd, a Canadian corporation, owns 100% of the shares of R Ltd. The R shares have an ACB of $80,000…

A: ACB, defined as the Adjusted Cost Base of any acquired property, that can be building, plant,…

Q: Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the…

A: ANSWER General Rule under sec 351(a) : No gain or lossshall be recognized if the property is…

Q: Adams transfers Blackacre to Newco in exchange for 100% of its common stock. Adams (6) acquired…

A: It is the amount of tax a taxpayer is liable to pay on the taxable income earned. The tax liability…

Q: Q. No. 3- X Ltd. owns all of the shares of Y Ltd. The shares of Y have an adjusted cost base of…

A: calculation of tax consequence are as follows

Q: What is A's basis in her shares of NEWCO, assuming the contributions meet all the requirements of…

A: Common stock: Common stock can be defined as the security issued by the company that represents the…

Q: For Georgie: c. Will Georgie recognize income/gain/loss? d. What is Georgie's basis in his 50…

A: Issuance of Stock in Exchange for a service Taxable transaction at FMV of stock Wages Expense for…

Q: Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the…

A: answer General Rule under sec 351(a) : No gain or lossshall be recognized if the property is…

Q: 16. Punjeet Corporation has zero balance in tis E&P - Punjeet Corporation distributes cash of…

A: The company pays a dividend to the shareholders as a return on the investment made by them. The…

Q: Leslie and Aira invested at The Ponkan King Corp. by buying P 3,000,000.00 and P 2,000,000.00 worth…

A: A stock seems to be a broad phrase that refers to any company's equity certificates. A share, on the…

Q: X Corp, a personal holding company, is owned by two individuals and has gross income as follows:…

A: Solution:- Given, X Corp. a personal holding company is owned by two individuals gross profits from…

Q: Max buys 500 shares of common stock in Independent Mercantile, Inc. As a shareholder of record, Max…

A: A shareholder is a partial owner of a company if he is holding minimum of one share of that company.…

Q: Sam owns all of the shares of X Ltd. Sofia owns all of the shares of Y Ltd. The owners plan to…

Q: Curly, Larry, Moe and Serafina incorporated Stooges Corp. As part of an integrated transaction, they…

A: The "basis" in the land, also known as the "cost basis," is the original value assigned to a piece…

Q: John transfers a property (A/B $10,000, FMV $50,000) to Brown Corp. in exchange for 100% of the…

A: Gain or loss in tax accounting is like figuring out whether you made money or lost money when you…

Q: through a discount broker. Find the profit, ignoring any dividends.

A: Amount invested = 15.25*(1+1.5%) = 15.25*1.015 = 1547.875

Q: a. How much gain, if any, does the the corporation recognize as a result of the distribution? b. By…

A: Distribution made to owners are tax free in case of partnership and LLC. There is no gain or loss in…

Q: No. 6- Jane Lim owns all of the shares of J Ltd., ntrolled private corporation with investments ir…

A: Tax consequences refers to any event which shall engage managing member to occur as the consequence…

Q: The partners of Dan and Ken are engaged in trading. Dan’s original capital was P40,000 and Ken ‘s…

A: Formula: Interest on capital = capital amount x interest rate

Q: Problem 6-47 (LO. 1, 2) Robert and Lori (Robert's sister) own all of the stock in Swan Corporation…

A: Answer - Part 1 - a) As per the given case above if the company distributes cash of $600,000 to…

Q: Mac and two of his colleagues (Cheez and Pie) set up a private limited company called Best Sdn. Bhd.…

A: Limited liability refers to that condition where the liability of the owners of a business entity is…

Q: 2. Bill lives in Macon, Georgia. However, he just bought fifty shares of stock in a large business…

A: Business firms can be setup and structured as in different types of entities. A sole proprietorship…

Q: Elaine, James, and Jeremy form Forest Corporation by transferring the following items to the…

A: General Rule under sec 351(a) : No gain or lossshall be recognized if the property is transferred to…

Q: Lee owns 100% of the shares in Aerodynamic Limited. Lee’s wife, Sandy, owns 100% of the shares in…

A: As per IAS 24 Related Party transactions A related party is someone or something that is connected…

Q: In each of the following independent cases, determine whether Duck qualifies as a personal holding…

A: The stock ownership requirement for a corporation to be considered a PHC is met if at least 50% of…

Q: 1. At the Beginning of Year 1 Peter and Paul want to establish a new business in the form of a…

A: When someone establishes a firm, they commit capital to it. This capital might take the form of…

Q: Grady exchanges property with a basis of $35,833 and fair market value of $43,000 for 60% of the…

A: Corporations are independent legal and tax entities. Own corporation pays taxes. Tax law defers…

Q: Jack exchanges property worth $100,000 ($30,000 basis) for 70% of the stock. Janet owned 100% of the…

A: Stock is referred to as a certificate which is provided by the corporations to the individuals who…

Q: der in each of the follow independent cases. In all cases, assume that the 80% test is met. a.…

A: The basis of a stock is the purchase price less commissions and other costs. When a security is…

Q: 1. Cooper owns 45% of Dermot and has an investment account with a balance of $1,000,000. Assume…

A: Investment refers to the amount invested in financial asset that may generate profit from them, The…

Question

X, owns an idle land worth 1M. X works in MCDO as an accounting manager. He decided to exchange the land to shares of stocks of MCDO, a domestic corp. for 10,000 shares with value of 1.2M. As a result, X obtains control, having 90% interest, in the corporation. What is the CGT?

Definition Definition Process by which financial information is analyzed, interpreted, and communicated to managers to support the achievement of an organization's goals. The main objective of managerial accounting is to maximize profits and minimize losses.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 Brief

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

A, an individual, is an architect and general contractor. B is a wealthy individual. Newco's Certificate of Incorporation states that it is authorized to issue 200 shares, no par value of common stock. B transfers S500,000 of cash to Newco in exchange for 50 shares of Newco's stock. A signs a contract with Newco in which A will perform services designing a housing project and then acting as general contractor on the construction of that housing project. In exchange, A will receive 50 shares of Newco's stock. 1b) Suppose instead that A and Newco do not enter into a written contract. A transfers $500 in cash for 50 shares of Newco's stock while B transfers $500,000 for 50 shares of Newco's stock. A then performs the architectural and contracting services for no further charge. Would this change your answer?
The Berry Corporation owns a building with a basis of $40,000 that is subject to a debt of $ 160,000. The FMV of the building is $100,000. Berry distributes the property in a nonliquidating distribution (along with the debt) to Delia, its sole shareholder. What is the amount of the distribution to Delia? a. $80,000. b. $50,000. c. zero. d. $30,000. e. none of the above.
P1 is a one-third owner in ABC LLC. P1 sold his interest in ABC to B1 for $95,000 in cash (plus assumption of liabilities of ABC). Assume P1's inside and outside basis in ABC are equal. ABC's balance sheet at the dale of sale follows. Determine the amount and character of the gain or loss P1 will realize at the sale. ASSETS: Cash Receivables Inventory Land LIABILITIES AND CAPITAL: Liabilities Capital-P1 Capital-P2 Capital-P3 Tax Basis 60,000 60,000 120,000 120,000 70,000 130,000 50,000 55,000 300,000 365,000 30,000 90,000 90,000 90,000 FMV 300,000
1
A shareholder contributes land and a building with fair market values of $ 308 and $837 respectively in return for common stock and $ 11 in cash. How much boot, if any, is allocated to the land?
What is James’ basis in his Forest Corporation stock?
Antoine, Becky, and Colleen form ABC Corporation by contributing the following items in exchange for stock in ABC Corporation: Adjusted Basis Fair Market Value of property given of property given Shares of Stock Received Antoine: Cash $ 30,000 $30,000 Equipment 300,000 420,000 4500 shares Becky: Land $100,000 $480,000 3000 shares* Mortgage 150,000 (150,000) Colleen: Services $0 $ 50,000 500 shares Additional information: Colleen has…
6. Brian owns 25% of Raisman Corporation's single class of stock (Brian owns 500 of 2,000 outstanding shares). Brian's basis in the stock is $12,000. Raisman's E&P is $132,000. If Raisman redeems 200 of Brian's stock for $28,000, Brian must report dividend income (if any) of (show all work and explain your answer): A) $0. B) $11,200. C) $16,800. D) $28,000.
5. Please help me to answer this completely. Thank you.
ABC Corporation operates hotels and restaurants in the central business district of Makati City. It is aiming to acquire XYZ Inc. another corporation in Pampanga. This corporation runs small hostels. ABC offers to acquire XYZ by offering 100,000 ABC ordinary shares valued at P12,000,000. 1. Kind according to purpose (Choose 1) a. Horizontalb. Verticalc. Product Extentiond. Market Extensione. Congenericf. Conglomerate 2. Kind according to approach to the target firm (Choose 1)a. Friendlyb. Hostile 3. Kind according to acquisition mode (Choose 1) a. Cashb. Equity swapc. Mix of cash and equity swap
Walton decided to issue additional new common stock. Mr. Adib Rahman, an individual investor purchased 100 shares of this stock from Munawar Associates, the underwriter. Would this transaction be a primary or a secondary market transaction? If Mr. Adib Rahman purchased previously outstanding Walton stock from another investor, then which financial market will this transaction be traded in?
What is Elaine’s basis in her Forest Corporation stock?