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 bases in return for 50 percent of the corporation's stock: Building Land Total FMV $ 75,000 175,000 $250,000 To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. Adjusted basis Assume Hermione's adjusted basis in the land was $250,000. i. What adjusted basis does Wizard Corporation take in the land and building received from Hermione? (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Tax- Adjusted Basis $ 20,000 80,000 $100,000 Land $ Building 20,000
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 bases in return for 50 percent of the corporation's stock: Building Land Total FMV $ 75,000 175,000 $250,000 To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. Adjusted basis Assume Hermione's adjusted basis in the land was $250,000. i. What adjusted basis does Wizard Corporation take in the land and building received from Hermione? (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Tax- Adjusted Basis $ 20,000 80,000 $100,000 Land $ Building 20,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 bases
in return for 50 percent of the corporation's stock:
Building
Land
Total
FMV
$ 75,000
175,000
$250,000
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
Adjusted basis
Assume Hermione's adjusted basis in the land was $250,000.
i. What adjusted basis does Wizard Corporation take in the land and building received from Hermione? (Leave no answer blank. Enter
zero if applicable. Negative amount should be indicated by a minus sign.)
Tax-
Adjusted
Basis
$ 20,000
80,000
$100,000
Land
$
Building
20,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F05ff31a9-709f-4a02-b6e2-7ded618c9867%2F34208289-4f28-4cd1-b08a-34784decbf3d%2F1vhdmec_processed.jpeg&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 bases
in return for 50 percent of the corporation's stock:
Building
Land
Total
FMV
$ 75,000
175,000
$250,000
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
Adjusted basis
Assume Hermione's adjusted basis in the land was $250,000.
i. What adjusted basis does Wizard Corporation take in the land and building received from Hermione? (Leave no answer blank. Enter
zero if applicable. Negative amount should be indicated by a minus sign.)
Tax-
Adjusted
Basis
$ 20,000
80,000
$100,000
Land
$
Building
20,000
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