Required information[The following information applies to the questions displayed below.]Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part oftheir discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's taxaccounting balance sheet. The relevant information is summarized as follows:CashReceivablesBuildingLandTotalPayablesMortgage*TotalFMV$ 28,80017,600Adjusted TaxBasis$ 28,800Appreciation17,600145,600252,00072,80084,000$ 444,000$ 203,20072,800168,000$ 240,800$ 21,600126,800$ 21,600126,800$ 148,400$ 148,400* The mortgage is attached to the building and land.Ernesto was asking for $546,100 for the company. His tax basis in the BLI stock was $163,000. Included in the sales pricewas an unrecognized customer list valued at $148,000. The unallocated portion of the purchase price ($102,500) will berecorded as goodwill.Note: Negative amounts should be indicated by a minus sign.a. What amount of gain or loss does BLI recognize if the transaction is structured as a direct asset sale to Amy and Brian? What amountof corporate-level tax does BLI pay because of the transaction?

Step 1:Calculate the amount of gain or loss and tax amount: Cash Paid A$546,100Liabilities assumed…

Answered: Required information [The following…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter13: Corporations: Earning & Profits And Distributions

Section: Chapter Questions

Problem 1RP

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Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: Cash Receivables Building Land Total Payables Mortgage Total FMV $ 28,500 20,400 127,000 233,250 $ 409,150 Gain or loss recognized $ 24,200 174,800 Adjusted Tax Basis $ 26,500 20,400 63,500 77,750 $190,150 $ 24,200 174,800 $ 199,000 $ 199,000 Appreciation 63,500 155,500 $ 219,000 *The mortgage is attached to the building and land. Ernesto was asking for $496,950 for the company. His tax basis in the BLI stock was $146.000. Included in the sales price was an unrecognized customer list valued at $189,000. The unallocated portion of the purchase price ($97,800) will be recorded as goodwill. Note: Negative amounts should be indicated by a minus sign. Problem 19-57 Part b (Algo) b. What…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: FMV Adjusted Basis Appreciation Cash $ 14,500 $ 14,500 Receivables 18,800 18,800 Building 102,500 51,250 51,250 Land 260,250 86,750 173,500 Total $ 396,050 $ 171,300 $ 224,750 Payables $ 19,100 $ 19,100 Mortgage* 159,000 159,000 Total $ 178,100 $ 178,100 * The mortgage is attached to the building and land. Ernesto was asking for $445,700 for the company. His tax basis in the BLI stock was…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: FMV Adjusted Basis Appreciation Cash $ 14,500 $ 14,500 Receivables 18,800 18,800 Building 102,500 51,250 51,250 Land 260,250 86,750 173,500 Total $ 396,050 $ 171,300 $ 224,750 Payables $ 19,100 $ 19,100 Mortgage* 159,000 159,000 Total $ 178,100 $ 178,100 * The mortgage is attached to the building and land. Ernesto was asking for $445,700 for the company. His tax basis in the BLI stock was…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: Cash Receivables Building Land Total Payables Mortgage* Total FMV $ 14,000 21,000 94,000 204,000 $333,000 $ 25,000 $ 25,000 108,000 108,000 $133,000 $133,000 Adjusted Basis $ 14,000 Gain or loss recognized Corporate-level tax 21,000 47,000 74,000 $156,000 Show Transcribed Text The mortgage is attached to the building and land. Ernesto was asking for $470,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales price was an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($120,000) will be recorded as goodwill. (Leave no answer blank. Enter zero if applicable.) Assume Ernesto agrees to sell his stock in BLI to Amy…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: FMV Adjusted Basis AppreciationCash$25,500 $25,500 Receivables 23,200 23,200 Building 133,000 66,500 66,500Land 272,250 90,750 181,500Total$453,950 $205,950 $248,000 Payables$23,000 $23,000 Mortgage* 150,000 150,000 Total$173,000 $173,000 * The mortgage is attached to the building and land. Ernesto was asking for $568,950 for the company. His tax basis in the BLI stock was $148,000. Included in the sales price was an unrecognized customer list valued at $196,000. The unallocated portion of the purchase price ($92,000) will be recorded as goodwill. (Negative amounts should be indicated by a minus sign.)
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: FMV Adjusted Basis Appreciation Cash $ 16,000 $ 16,000 Receivables 17,500 17,500 Building 102,000 51,000 51,000 Land 249,000 83,000 166,000 Total $ 384,500 $ 167,500 $ 217,000 Payables $ 24,300 $ 24,300 Mortgage* 110,250 110,250 Total $ 134,550 $ 134,550 * The mortgage is attached to the building and land. Ernesto was asking for $482,700 for the company. His tax basis in the BLI stock was $192,000. Included in the sales price was an unrecognized customer list valued at $132,000. The unallocated portion of the purchase price ($100,750) will be recorded as…
Required information Problem 19-57 (LO 19-4) (Algo) [The following information applies to the questions displayed below.] Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: Adjusted Tax Basis $ 31,500 17,000 Cash Receivables Building Land Total Payables Mortgage* Total FMV $ 31,500 17,000 113,500 273,000 $435,000 56,750 91,000 $ 196,250 $22,300 $ 22,300 182,250 182,250 $ 204,550 $ 204,550 Appreciation 56,750 182,000 $ 238,750 *The mortgage is attached to the building and land. Ernesto was asking for $450,200 for the company. His tax basis in the BLI stock was $120,000. Included in the sales price was an unrecognized customer list valued at $138,000. The unallocated portion of the purchase price ($81,750) will be recorded as…
[The following information applies to the questions displayed below.] Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) Cash Receivables Building Land Total FMV 19,000 24,000 71,000 155,000 $ 269,000 Payables Mortgage* Adjusted Tax Basis $ 19,000 24,000 35,500 50,000 $ 128,500 $ 27,000 89,000 $ 116,000 Total * The mortgage is attached to the building and land. $ 27,000 89,000 $ 116,000 Appreciation 35,500 105,000 $ 140,500 Ernesto was asking for $420,000 for the company. His tax basis in the BLI stock was $180,000. Included in the sales price was an unrecognized customer list valued at $180,000. The unallocated portion of the…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: 24,200 Adjusted Tax Basis $ 24,000 Appreciation Cash FMV $ 24,000 Receivables 24,200 Building 112,000 56,000 56,000 Land 238,500 79,500 159,000 Total $ 398,700 $ 183,700 $ 215,000 Payables Mortgage* $ 25,600 128,300 $ 25,600 128,300 Total $ 153,900 $ 153,900 *The mortgage is attached to the building and land. Ernesto was asking for $504,100 for the company. His tax basis in the BLI stock was $144,000. Included in the sales price was an unrecognized customer list valued at $183,000. The unallocated portion of the purchase price ($76,300) will be recorded as goodwill. Note: Negative amounts should be indicated by a minus sign. a. What amount of gain or loss does BLI recognize if the…
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: PMV Adjusted Bais Appreciation Cash $14,000 $14,000 Receivables $19,100 $19,100 Building $130,000 $65,000 $65,000 Land $247,500 $82,500 $165,000 Total $410,600 $180,600 $230,000 Payables $23,900 $23,900 Mortage* 138,000 $138,000 Total $161,900 $161,900 *The mortage is attached to the building and land Ernesto was asking for $535,450 for the company. His tax basis is in the…
! Required information [The following information applies to the questions displayed below.] Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) Cash Receivables Building Land Total Payables Mortgage* FMV 15,000 22,000 95,000 204,000 $ 336,000 $ 24,000 113,000 $ 137,000 Total * The mortgage is attached to the building and land. Gain or loss recognized Corporate-level tax Adjusted Tax Basis $ 15,000 22,000 47,500 44,000 $ 128,500 $ $ $ 24,000 113,000 $ 137,000 Ernesto was asking for $432,000 for the company. His tax basis in the BLI stock was $165,000. Included in the sales price was an unrecognized customer list valued at…
[ine Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: • Cash Receivables Building Land Total Payables Mortgage* Total FMV $ 29,000 17,300 Adjusted Tax Basis $ 29,000 Appreciation 17,300 124,500 62,250 295,500 98,500 $ 466,300 $ 207,050 62,250 197,000 $ 259,250 $ 21,400 161,000 $ 182,400 $ 21,400 161,000 $ 182,400 The mortgage is attached to the building and land. Ernesto was asking for $500,650 for the company. His tax basis in the BLI stock was $114,000. Included in the sales price was an unrecognized customer list valued at $117,000. The unallocated portion of the purchase price ($99,750) will be recorded as goodwill. Note: Negative amounts should be indicated by a minus sign. Problem 19-57 Part a (Algo) a. What amount of gain…

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