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Problem 2:   The following three individuals decide to form TOBY, INC., a C corporation: James:   Receives 500 shares of stock Services performed (developed technology platform) $40,000 Contributed computer and peripheral equipment 5,000                           10,000 Jenna: Receives 500 shares of stock Cash                                                                                                                  20,000 Office furnishings (desk, chairs, retail fixtures) 10,000                            30,000 Ollie: Receives 500 shares of stock Land and Building                                30,000                           100,000 Mortgage on land & building (assumed by TOBY, INC.) 60,000    Does James have income, gain or loss on the transaction in which he receives stock in TOBY, INC.?  Indicate the amount of any income, gain, or loss. What is James’s basis in TOBY, INC. stock? Does Jenna have income, gain, or loss on the transaction in which she receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss. What is Jenna’s basis in TOBY, INC. stock? Does Ollie have income, gain , or loss on the transaction in which he receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss. What is Ollie’s basis in his TOBY, INC. stock? What basis does TOBY, INC. have in: The computer and peripheral equipment Office furnishings Land and building

Problem 2:   The following three individuals decide to form TOBY, INC., a C corporation: James:   Receives 500 shares of stock Services performed (developed technology platform) $40,000 Contributed computer and peripheral equipment 5,000                           10,000 Jenna: Receives 500 shares of stock Cash                                                                                                                  20,000 Office furnishings (desk, chairs, retail fixtures) 10,000                            30,000 Ollie: Receives 500 shares of stock Land and Building                                30,000                           100,000 Mortgage on land & building (assumed by TOBY, INC.) 60,000    Does James have income, gain or loss on the transaction in which he receives stock in TOBY, INC.?  Indicate the amount of any income, gain, or loss. What is James’s basis in TOBY, INC. stock? Does Jenna have income, gain, or loss on the transaction in which she receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss. What is Jenna’s basis in TOBY, INC. stock? Does Ollie have income, gain , or loss on the transaction in which he receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss. What is Ollie’s basis in his TOBY, INC. stock? What basis does TOBY, INC. have in: The computer and peripheral equipment Office furnishings Land and building

FINANCIAL ACCOUNTING
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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Problem 2:

 

The following three individuals decide to form TOBY, INC., a C corporation:

James:   Receives 500 shares of stock

  • Services performed (developed technology platform) $40,000
  • Contributed computer and peripheral equipment 5,000                           10,000

Jenna: Receives 500 shares of stock

  • Cash                                                                                                                  20,000
  • Office furnishings (desk, chairs, retail fixtures) 10,000                            30,000

Ollie: Receives 500 shares of stock

  • Land and Building                                30,000                           100,000
  • Mortgage on land & building (assumed by TOBY, INC.) 60,000 

 

  1. Does James have income, gain or loss on the transaction in which he receives stock in TOBY, INC.?  Indicate the amount of any income, gain, or loss.

  2. What is James’s basis in TOBY, INC. stock?

  3. Does Jenna have income, gain, or loss on the transaction in which she receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss.

  4. What is Jenna’s basis in TOBY, INC. stock?

  5. Does Ollie have income, gain , or loss on the transaction in which he receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss.

  6. What is Ollie’s basis in his TOBY, INC. stock?

  7. What basis does TOBY, INC. have in:
    1. The computer and peripheral equipment
    2. Office furnishings
    3. Land and building

 

 

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