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 Adjusted Tax Basis Building $ 75,000 $ 20,000 Land 175,000 80,000 Total $ 250,000 $ 100,000   To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. What amount of gain or loss does Hermione recognize on the formation of the corporation?  Gain or loss recognized

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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17.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

Adjusted Tax Basis

Building

$ 75,000

$ 20,000

Land

175,000

80,000

Total

$ 250,000

$ 100,000

 

To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.

What amount of gain or loss does Hermione recognize on the formation of the corporation?  Gain or loss recognized 

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