Zhang incorporated her sole proprietorship by transferring inventory, a 100 percent of the corporation's stock. The property transferred to the and adjusted tax bases: Adjusted Tax Basis FMV $ 56,000 420,000 644,000 $ 28,000 Inventory Building 280,000 Land 840,000 $ 1,120,000 $ 1,148,000 Total The corporation also assumed a mortgage of $100,000 attached to the corporation's stock received in the exchange was $1,020,000. The tran under §351. (Negative amount should be indicated by a minus sign. L
Zhang incorporated her sole proprietorship by transferring inventory, a 100 percent of the corporation's stock. The property transferred to the and adjusted tax bases: Adjusted Tax Basis FMV $ 56,000 420,000 644,000 $ 28,000 Inventory Building 280,000 Land 840,000 $ 1,120,000 $ 1,148,000 Total The corporation also assumed a mortgage of $100,000 attached to the corporation's stock received in the exchange was $1,020,000. The tran under §351. (Negative amount should be indicated by a minus sign. L
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 tax bases:
Adjusted Tax
FMV
Basis
$ 56,000
420,000
$ 28,000
280,000
840,000
Inventory
Building
644,000
$ 1,120,000
Land
Total
$ 1,148,000
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 $1,020,000. 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.)
c. What is Zhang's tax basis in the stock she receives in the exchange?
Tax basis](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F82a2c61e-b075-443a-8c26-c8eda0f652c8%2F22c020f7-c213-498c-8f3b-02acdf4897bf%2Fvig0kne_processed.png&w=3840&q=75)
Transcribed Image Text: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 tax bases:
Adjusted Tax
FMV
Basis
$ 56,000
420,000
$ 28,000
280,000
840,000
Inventory
Building
644,000
$ 1,120,000
Land
Total
$ 1,148,000
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 $1,020,000. 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.)
c. What is Zhang's tax basis in the stock she receives in the exchange?
Tax basis
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