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Zhang incorporated her sole proprietorship by transferring inventory, a b 100 percent of the corporation's stock. The property transferred to the c and tax bases: Tax Basis FMV Inventory $ 20,000 $ 10,000 Building 150 000 100 000

Zhang incorporated her sole proprietorship by transferring inventory, a b 100 percent of the corporation's stock. The property transferred to the c and tax bases: Tax Basis FMV Inventory $ 20,000 $ 10,000 Building 150 000 100 000

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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a. What amount of gain or loss does Zhang recognize on the transfer of the property to her corporation?

b. What is Zhang’s tax basis in the stock she receives in the exchange?

[The following information applies to the questions displayed below.] 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 tax bases: FMV Inventory $ 20,000 Building Land Total Tax Basis $ 10,000 150,000 100,000 230,000 70,000 $400,000 $180,000 The corporation also assumed a mortgage of $200,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $220,000. The exchange met the requirements to be tax-deferred under §351. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
Transcribed Image Text:[The following information applies to the questions displayed below.] 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 tax bases: FMV Inventory $ 20,000 Building Land Total Tax Basis $ 10,000 150,000 100,000 230,000 70,000 $400,000 $180,000 The corporation also assumed a mortgage of $200,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $220,000. The exchange met the requirements to be tax-deferred under §351. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
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