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wing information applies to the questions displayed below.] rporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for nt of the corporation's stock. The property transferred to the corporation had the following fair market values ted tax bases: Adjusted Tax Basis $ 11,300 172,500 364,000 FMV $ 21,000 198,000 267,000

wing information applies to the questions displayed below.] rporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for nt of the corporation's stock. The property transferred to the corporation had the following fair market values ted tax bases: Adjusted Tax Basis $ 11,300 172,500 364,000 FMV $ 21,000 198,000 267,000

FINANCIAL ACCOUNTING
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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Required information [The following information applies to the questions displayed below.] Carla 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 tax bases: Adjusted Tax Basis FMV $ 21,000 $ 11,300 Inventory Building Land 198,000 172,500 364,000 267,000 $ 486,000 $ 547,800 Total The corporation also assumed a mortgage of $125,250 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $360,750. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Carla 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 tax bases: Adjusted Tax Basis FMV $ 21,000 $ 11,300 Inventory Building Land 198,000 172,500 364,000 267,000 $ 486,000 $ 547,800 Total The corporation also assumed a mortgage of $125,250 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $360,750. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation? Fair market value of stock received 360,750 Mortgage assumed by corporation 125,250 Amount realized 486,000 Adjusted tax basis of the property transferred 547,800 Gain realized b. What amount of gain or loss does Carla recognize on the transfer of the property to her corporation? Gain or loss recognized c. What is Carla's basis in the stock she receives in her corporation? Tax basis
Transcribed Image Text:a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation? Fair market value of stock received 360,750 Mortgage assumed by corporation 125,250 Amount realized 486,000 Adjusted tax basis of the property transferred 547,800 Gain realized b. What amount of gain or loss does Carla recognize on the transfer of the property to her corporation? Gain or loss recognized c. What is Carla's basis in the stock she receives in her corporation? Tax basis
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