Question 3: Mary transferred land with an adjusted basis to her of $ 21,000 and a fair marketvalue of $ 57,000 to Wine Corporation in exchange for 100% of Wine Corporation's only classof stock. The land was subject to a liability of $ 28,000, which Wine assumed for legitimatebusiness purposes. The fair market value of Wine's stock at the time of the transfer was.$31,000. What is the amount of Mary's recognized gain?a) $ 29,000b) $ 7,000c) $ 26,000d) $ 10,0001 of 2

The objective of this question is to calculate the amount of Mary's recognized gain from the…

Answered: Question 3: Mary transferred land with…

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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Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted tax bases: Adjusted Tax FMV Basis $ 21,500 54,750 139,000 $ 9,200 47,000 Inventory Building Land 69,000 $ 215,250 $ 125,200 Total The fair market value of the corporation's stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ramon. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. What amount of gain or loss does Ramon realize on the transfer of the property to his corporation? Gain or loss realized
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Tony Smith and Bill Jones buy property for $500,000. Tony and Bill organize a corporation when the property has a fair market value of $700,000. They transfer the property to the corporation for all its authorized capital stock, which has a par value of $700,000. What amount of gain is recognized by Tony? A. $0 B. $250,000 C. $500,000 D. $700,000
Corporate Organization Exercise Kathy and Carl formed a corporation by each contributing an asset with a FMV of $50,000 for half of the stock in the corporation. Prior to the transfer, Kathy had an adjusted basis of $40,000 in her asset and Carl had an adjusted basis of $60,000 in his asset. h. Does Carl have any positive or negative consequences if the corporation sells Kathy's asset for $50,000 ? Quantify the impact assuming the corporation's marginal tax rate is 21%. Answer the following assuming Carl and the corporation did not make the election i. What is Carl's realized loss on the transaction?
Individual E owns equipment that originally cost $60,000 and has an undepreciated capital cost of $40,000. E sells the equipment to a corporation for its market value of $50,000. To avoid tax on the transfer a section 85 election is filed by E and the corporation. What is the appropriate section 85 elected transfer price?
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted bases: FMV Adjusted Basis Inventory $ 60,000 $ 30,000 Building 450,000 300,000 Land 690,000 900,000 Total $ 1,200,000 $ 1,230,000 Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000. What is the corporation’s adjusted basis in each of the assets received in the exchange?(Do not round intermediate calculations.)
hen Bruno's basis in his LLC interest is $283,800, he receives cash of $113,520, a proportionate share of inventory, and land in a distribution that liquidates both the LLC and his entire LLC interest. The inventory has a basis to the LLC of $70,950 and a fair market value of $90,816. The land's basis is $127,710, and the fair market value is $113,520. How much gain or loss does Bruno recognize, and what is his basis in the inventory and land received in the distribution? If an amount is zero, enter "0". Bruno recognizes (a gain, loss, neither a gain or loss) of $_____________. Bruno's basis in the inventory is $_______________ and his basis in the land is $___________________.
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted tax bases: Inventory Building Land Total FMV $ 20,000 150,000 230,000 Adjusted Tax Basis $ 10,000 100,000 300,000 $ 400,000 $ 410,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $300,000. The transaction met the requirements to be tax-deferred under §351. Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Required: a. What amount of gain or loss does Zhang realize on the transfer of the property to the corporation? b. What amount of gain or loss does Zhang recognize on the transfer of the property to the corporation? c. What is Zhang's tax basis in the stock…
A, an individual (“A”) and X Corporation (“X”) each transferred property with a fair market value (“FMV”) of $100,000 and an adjusted basis of $20,000 to newly formed C Corporation (“C”) in exchange for 10 shares of C Corporation stock. These are the only shares of C outstanding. Assuming the transfers are related: a. What income, gain or loss, if any does A recognize in this transaction? b. If C’s current E&P during the year were $30,000, and C distributed $40,000 cash to each of X, and A, during the year, what is X’ taxable income (assuming the distribution from C is X’ only transaction during the year)?
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted tax bases: Adjusted Tax FMV Basis $ 56,000 420,000 $ 28,000 280,000 840,000 $ 1,148,000 Inventory Building 644,000 $ 1,120,000 Land Total The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,020,000. The transaction met the requirements to be tax-deferred under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume the corporation assumed a mortgage of $1,220,000 attached to the building and land. Assume the fair market value of the building is now $700,000 and the fair market value of the land is $1,484,000. The fair market value of the stock remains…
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted bases: Inventory Building Land Total FMV 88,000 660,000 1,012,000 $1,760,000 $ Adjusted Basis 44,000 440,000 1,320,000 $1,804,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,660,000. The transaction met the requirements to be tax-deferred under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)

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