Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the 100 percent of the corporation's stock. The property transferred to the corporation had the follow and adjusted tax bases: Adjusted Tax Basis $ 28,000 280,000 FMV Inventory Building Land $ 56,000 420,000 644,000 $ 1,120,000 840,000 $ 1,148,000 Total The corporation also assumed a mortgage of $100,000 attached to the building and land. The fa corporation's stock received in the exchange was $1,020,000. The transaction met the requireme under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Er me the corporation assumed a mortgage of $1,220,000 attached to the building and land. Assume ng is now $700,000 and the fair market value of the land is $1,484,000. The fair market value of tl
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the 100 percent of the corporation's stock. The property transferred to the corporation had the follow and adjusted tax bases: Adjusted Tax Basis $ 28,000 280,000 FMV Inventory Building Land $ 56,000 420,000 644,000 $ 1,120,000 840,000 $ 1,148,000 Total The corporation also assumed a mortgage of $100,000 attached to the building and land. The fa corporation's stock received in the exchange was $1,020,000. The transaction met the requireme under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Er me the corporation assumed a mortgage of $1,220,000 attached to the building and land. Assume ng is now $700,000 and the fair market value of the land is $1,484,000. The fair market value of tl
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![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
644,000
$ 28,000
280,000
840,000
Inventory
Building
Land
$ 1,120,000
$ 1,148,000
Total
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.)
Assume the corporation assumed a mortgage of $1,220,000 attached to the building and land. Assume the fair market value of the
building is now $700,000 and the fair market value of the land is $1,484,000. The fair market value of the stock remains $1,020,000.
f. 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%2F4899093e-d9bc-4b02-8e42-783f3efa7267%2F8xzu0l9_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
644,000
$ 28,000
280,000
840,000
Inventory
Building
Land
$ 1,120,000
$ 1,148,000
Total
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.)
Assume the corporation assumed a mortgage of $1,220,000 attached to the building and land. Assume the fair market value of the
building is now $700,000 and the fair market value of the land is $1,484,000. The fair market value of the stock remains $1,020,000.
f. What is Zhang's tax basis in the stock she receives in the exchange?
Tax basis
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