Required information [The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) FMV $ 75,000 175,000 $ 250,000 To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. Building Land Total Adjusted Tax Basis $ 20,000 80,000 $ 100,000 b. What is Ron's tax basis in the stock he receives in return for his contribution of property to the corporation? Tax basis
Required information [The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) FMV $ 75,000 175,000 $ 250,000 To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. Building Land Total Adjusted Tax Basis $ 20,000 80,000 $ 100,000 b. What is Ron's tax basis in the stock he receives in return for his contribution of property to the corporation? Tax basis
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 30P
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Required information
[The following information applies to the questions displayed below.]
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of
the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax
bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative
amount should be indicated by a minus sign.)
Building
Land
Total
FMV
$ 75,000
175,000
$ 250,000
Adjusted Tax
Basis
$ 20,000
80,000
$ 100,000
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
Tax basis
b. What is Ron's tax basis in the stock he receives in return for his contribution of property to the corporation?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87f377c8-556b-40c3-ad73-583aac17d9d0%2F2e94733b-dd45-4b39-bef3-0ba41d04b2cd%2Flf5cv0d_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of
the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax
bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative
amount should be indicated by a minus sign.)
Building
Land
Total
FMV
$ 75,000
175,000
$ 250,000
Adjusted Tax
Basis
$ 20,000
80,000
$ 100,000
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
Tax basis
b. What is Ron's tax basis in the stock he receives in return for his contribution of property to the corporation?
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