Robert Boyd owns 75% of the outstanding common stock in Boyd Inc. Robert is planning to transfer certain commercial real estate (FMV $200,000, basis $89,000) to the corporation in exchange for additional shares of Boyd common stock and marketable securities (FMV $25,000, basis to the corporation of $16,500). Subsequent to the proposed exchange, Robert’s ownership interest in Boyd Inc. will increase to 83%. Robert Boyd has a $315,000 net operating loss carryforward into the current year and only $72,000 of projected income from other sources. Boyd Inc. is in a 34% marginal tax bracket. Required What will be the tax consequences to Robert and Boyd Inc. of this proposed transaction?
Robert Boyd owns 75% of the outstanding common stock in Boyd Inc. Robert is planning to transfer certain commercial real estate (FMV $200,000, basis $89,000) to the corporation in exchange for additional shares of Boyd common stock and marketable securities (FMV $25,000, basis to the corporation of $16,500). Subsequent to the proposed exchange, Robert’s ownership interest in Boyd Inc. will increase to 83%. Robert Boyd has a $315,000 net operating loss carryforward into the current year and only $72,000 of projected income from other sources. Boyd Inc. is in a 34% marginal tax bracket. Required What will be the tax consequences to Robert and Boyd Inc. of this proposed transaction?
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 33P
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Robert Boyd owns 75% of the outstanding common stock in Boyd Inc. Robert is planning to transfer certain commercial real estate (FMV $200,000, basis $89,000) to the corporation in exchange for additional shares of Boyd common stock and marketable securities (FMV $25,000, basis to the corporation of $16,500). Subsequent to the proposed exchange, Robert’s ownership interest in Boyd Inc. will increase to 83%.
Robert Boyd has a $315,000 net operating loss carryforward into the current year and only $72,000 of projected income from other sources. Boyd Inc. is in a 34% marginal tax bracket.
Required
- What will be the tax consequences to Robert and Boyd Inc. of this proposed transaction?
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