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 bases: FMV Adjusted BasisInventory$15,750 $9,500Building 71,500 54,750Land 195,000 72,500Total$282,250 $136,750 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.b. What amount of gain or loss does Ramon recognize on the transfer of the property to his corporation? c. What is Ramon’s basis in the stock he receives in his corporation?

Gain realized = Fair market value- adjusted tax basis of property transferred = 282250 - 136750…

Answered: Ramon incorporated his sole…

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 bases:

	FMV		Adjusted Basis
Inventory	$	15,750		$	9,500
Building		71,500			54,750
Land		195,000			72,500
Total	$	282,250		$	136,750

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.

b. What amount of gain or loss does Ramon recognize on the transfer of the property to his corporation?

c. What is Ramon’s basis in the stock he receives in his corporation?

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