Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 in return for 50 percent ofthe corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted taxbases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negativeamount should be indicated by a minus sign.)Adjusted TaxFMVBasis$ 114,375266,875$ 30,500122,000BuildingLand$ 381,250$ 152,500TotalTo equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock.Assume Hermione's adjusted tax basis in the land was $381,250.i. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione?X Answer is complete but not entirely correct.LandBuildingAdjusted tax basis2$381,250 X $53,375

Calculation of Tax adjusted Basis Fair market value = $305000 Add: cash received = $76250 Total…

Ron and Hermione formed Wizard Corporation on January 2. Ron contributed the corporation's stock. Hermione contributed a building and land with the fo bases in return for 50 percent of the corporation's stock: (Leave no answer b amount should be indicated by a minus sign.) Adjusted Tax Basis FMV Building Land $ 114,375 266,875 $ 381,250 $ 30,500 122,000 $ 152,500 Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in ade ume Hermione's adjusted tax basis in the land was $381,250. nat adjusted tax basis does Wizard Corporation take in the land and building re Answer is complete but not entirely correct. Land Building djusted tax basis $ 381,250 53,375

Ron and Hermione formed Wizard Corporation on January 2. Ron contributed the corporation's stock. Hermione contributed a building and land with the fo bases in return for 50 percent of the corporation's stock: (Leave no answer b amount should be indicated by a minus sign.) Adjusted Tax Basis FMV Building Land $ 114,375 266,875 $ 381,250 $ 30,500 122,000 $ 152,500 Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in ade ume Hermione's adjusted tax basis in the land was $381,250. nat adjusted tax basis does Wizard Corporation take in the land and building re Answer is complete but not entirely correct. Land Building djusted tax basis $ 381,250 53,375

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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