Problem 4-38 (LO. 1, 2, 3) Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Broadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land. If an amount is zero, enter "0". a. What are the tax consequences to Allie and to Broadbill Corporation? , Allie has a realized gain of $ in the land and Allie has a s Since of which $ is recognized. Broadbill Corporation has a basis of s basis in the stock. b. How would the tax consequences to Allie differ if she had not borrowed the $100,000? Since Allie has a recognized gain of $ Broadbill Corporation has a basis of $ in the land and Allie has a s basis in the stock.
Problem 4-38 (LO. 1, 2, 3) Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Broadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land. If an amount is zero, enter "0". a. What are the tax consequences to Allie and to Broadbill Corporation? , Allie has a realized gain of $ in the land and Allie has a s Since of which $ is recognized. Broadbill Corporation has a basis of s basis in the stock. b. How would the tax consequences to Allie differ if she had not borrowed the $100,000? Since Allie has a recognized gain of $ Broadbill Corporation has a basis of $ in the land and Allie has a s basis in the stock.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 4-38 (LO. 1, 2, 3)
Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of
$375,000. One month prior to incorporating Broadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage
on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land.
If an amount is zero, enter "0".
a. What are the tax consequences to Allie and to Broadbill Corporation?
Since
Allie has a realized gain of $
of which $
is recognized. Broadbill Corporation
has a basis of $
in the land and Allie has a $
basis in the stock.
b. How would the tax consequences to Allie differ if she had not borrowed the $100,000?
Since
, Allie has a recognized gain of $
. Broadbill Corporation has a basis of $
in the
land and Allie has a $
basis in the stock.
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