Sam and Maude (both individuals) form S&M Corporation. Sam contributes cash of $100,000 and Maude contributes property with a basis of $40,000 and a fair marketvalue of $100,000. If Sam and Maude own all of the stock in S&M Corporation immediately after the transfer, what is Maude's recognized gain on the transfer?O a. $0O b. $50,000O c. $20,000O d. $30,000

To determine Maude's recognized gain on the transfer, we need to consider the tax rules regarding…

Answered: Sam and Maude (both individuals) form…

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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N1.
Question. 15
Arnold and Bobby form Happy Corporation. Arnold transfers equipment that Arnold has an adjusted basis of $30,000 but has a fair market value of $60,000. Arnold receives 50% of the stock. Bobby transfers equipment with an adjusted basis of $70,000 and a faiir market value of $60,000 for the remaining 50% of the stock of Happy Corporation. Does Arnold, Bobbly or Happy have to report any gain or loss on this transaction? Why or why not?
11.
Matthew and Hein sell to Melges a 1/3 interest in the Matthew - Hein partnership. Melges will pay Matthew and Hein each $141400 for admission into the organization. Before this transaction, Matthew and Hein show capital balances of $209000 each. The journal entry to record the admission of Melges will O show a credit to Melges, Capital for $282800. O show a debit to Hein, Capital for $141400. show a debit to Cash for $282800. O not show a debit to Cash.
Marilyn owns 100% of the stock of Lilac, Inc., with an adjusted basis of $45,000. She receives a cash distribution of $160,000 from Lilac when its earnings and profits are $90,000. A. What is Marilyn’s dividend income? B. What is Marilyn’s recognized gain or loss? c. What is Marilyn’s adjusted basis for her stock after the distribution?
George and Nancy form EB Corporation. George transfers land (basis of $100 and fair market value of S110) for 10 shares plus $10 cash. Nancy transfers $5 cash for 2 shares in EB Corporation, what gains do george and Nancy recognize, what is the stock basis
Ee.7.
Castle and Dave formed an S corporation that is owned as follows: Castle 75% and Dave 25%. The corporation distributes an asset to each owner. The corporation has a basis of $45,000 for each asset. The fair market value of each of the assets is as follows: Castle $90,000 and Dave $50,000. a. What is the recognized gain for the corporation? b. How much of the gain does Castle report? c. How much of the gain does Dave report?
Dog
Stock owned by a brother is sold to his sister. The brother's adjusted basis of the stock is $22,000. He sells the stock for $19,000. The sister sells the stock to an unrelated party for $17,000. What is the gain recognized by the sister? a. Her basis is $17,000. The price she paid for it. She sold it for $19,000. She recognizes a gain of $2,000. b. Because of the situation, she only has a $1,000 recognized loss. c. She takes the brother's basis in the stock and recognizes the $1,000 gain. d. None of the answers provided are correct.
Sarah transfer land with a fair market value of $25,000, to a corporation in exchange for 100 percent of the corporation’s stock. What amount of gain must Sarah recognize as a result of this transaction? $0 $25,000 $100,000 125,000

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