The Berry Corporation owns a building with a basis of $40,000 that is subject to a debt of $160,000. The FMV of the building is $100,000. Berry distributes the property in a nonliquidatingdistribution (along with the debt) to Delia, its sole shareholder. What is the amount of thedistribution to Delia? a. $80,000. b. $50,000. c. zero. d. $30,000. e. none of the above.

The Fair Market Value (FMV) of a building is the price that the property would sell for on the open…

Answered: The Berry Corporation owns a building…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Kansas Company acquired a building valued at $158,000 for property tax purposes in exchange for 12,000 shares of its $3 par common stock. The stock is widely traded and selling for $19 per share. At what amount should the building be recorded by Kansas Company? a. $228,000 b. $36,000 OC. $158,000 Od. $191,500
X Corporation was formed in Year 1. In Year 1, X Corporation: (i) received $100,000 of revenue, (ii) a $20,000 dividend distribution from Y Corporation (X owned less than 1% of Y and received a $10,000 DRD) (iii) purchased a Section 179 asset for $10,000, (iv) paid $21,000 of federal tax and (v) distributed $10,000 cash to each of its two shareholders A and B. In Year 2, X received $50,000 of revenue and contributed $12,000 to cash to a qualified charity. X made no distributions in Year 2. a. What is X' Accumulated E&P at the beginning of Year 2? (Write your answer as a number only, i.e. $5,000) b. What is X' Accumulated E&P at the beginning of Year 3? (Write your answer as a number only, i.e. $12,000)
Wasatch Corporation (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of the TC stock. Compute WC's deductible DRD in each of the following situations: e. WC's taxable income (loss) without the dividend income or the DRD is $(500,000). Deductible DRD
9. Albert transfers land (basis of S140,000 and fair market value of $320,000) to Gold Corporation for 80% of its stock Albert's basis in stock received is . a. Albert has a recognized gain on the transfer of $140,000. b. Albert has a basis of $140,000 c. Albert has a basis of $320,000. d. Gold Corporation has a basis in the land of $220,000. e. None of the above. 10. Rhonda and Marta form Blue Corporation. Rhonda transfers land (basis of $60,00 and fair market value of $180,000) for 50 shares plus $20,000 cash. Marta transfers $160,000 cash for 50 shares in Blue Corporation. a. Rhonda's basis in the Blue Corporation stock is $60,00. b. Blue Corporation's basis in the land is $55,000. c. Blue Corporation's basis in the land is $180,000. d. Rhonda recognizes a gain on the transfer of $125,000. c. None of the above.
Required information. Problem 19-63 (LO 19-5) (Algo) [The following information applies to the questions displayed below] Tiffany and Carlos decided to liquidate their jointly owned corporation, Royal Oak Furniture (ROF) After liquidating its remaining inventory and paying off its remaining liabilities, ROF had the following tax accounting balance sheet Adjusted Tax Basis $ 205,500 14,500 205,000 $425,000 Cash Building Land Total FMV $ 205,500 66,500 139,000 $ 411,000 Appreciation (Depreciation) Gain or loss recognized 52,000 (66,000) $ (14,000) Under the terms of the agreement, Tiffany will receive the $205,500 cash in exchange for her 50 percent interest in ROF Tiffany's tax basis in her ROF stock is $55,000. Carlos will receive the building and land in exchange for his 50 percent interest in ROF His tax basis in the ROF stock is $103,000 Assume for purposes of this problem that the cash available to distribute to the shareholders has been reduced by any tax paid by the corporation…
Abel Corp., an S corp., distributes property to a shareholder named Jay. Immediately before the distribution, the basis of Jay's investment in Abel Corp. totaled $31,000. Additional information follows: Adjusted basis of the property at the distribution date: $20,000 FMV of the property at the distribution date: $19,000 a. What is Jay's basis in his stock investment after the distribution? b. What is Jay's basis in the property after the distribution? c. What amount of loss would Abel Corp. recognize as a result of the distribution?
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and adjusted bases: FMV Adjusted Basis Inventory $ 60,000 $ 30,000 Building 450,000 300,000 Land 690,000 900,000 Total $ 1,200,000 $ 1,230,000 Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000. What is the corporation’s adjusted basis in each of the assets received in the exchange?(Do not round intermediate calculations.)
During the year, Leak Construction Corp. distributed a crane used in its business to Q, who owns 100 percent of the stock. The crane was worth $10,000 and had a basis of $19,000. The corporation also distributed land worth $70,000, with a basis of $40,000. Leak will report
Shauna and Danielle decided to liquidate their jointly owned corporation, Woodward Fashions Incorporated (WFI). After liquidating its remaining inventory and paying off its remaining liabilities, WFI had the following tax accounting balance sheet: Adjusted FMV Таx Basis Appreciation $ 165,000 33,000 $ 165,000 16,500 Cash Building 16,500 132,000 66,000 $ 247,500 Land 66,000 $ 330,000 $ 82,500 Total Under the terms of the agreement, Shauna will receive the $165,000 cash in exchange for her 50 percent interest in WFI. Shauna's tax basis in her WFI stock is $41,250. Danielle will receive the building and land in exchange for her 50 percent interest in WFI. Danielle's tax basis in her WFI stock is $82,500. Assume for purposes of this problem that the cash available to distribute to the shareholders has been reduced by any tax paid by the corporation on gain recognized as a result of the liquidation. (Negative amounts should be indicated by a minus sign.) c. What amount of gain or loss does…
Breslin Incorporated made a capital contribution of investment property to its 100-percent-owned subsidiary, Crisler Company. The investment property had a fair market value of $3,000,000 and a tax basis to Breslin of $2,225,000. b. What is the tax basis of the investment property to Crisler Company after the contribution to capital?
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted bases: Inventory Building Land Total FMV 88,000 660,000 1,012,000 $1,760,000 $ Adjusted Basis 44,000 440,000 1,320,000 $1,804,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,660,000. The transaction met the requirements to be tax-deferred under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
Rob transferred the following assets and liabilities to Warble Corporation. Adjusted Basis Fair Market Value Building $210,000 $225,000 Equipment 45,000 75,000 Trucks 15,000 30,000 Mortgage(held 30,000 30,000 for four years) on building In return, Rob received $75,000 in cash plus 90% of Warble Corporation's only class of stock outstanding (fair market value of $225,000).

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS