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: Inventory Building Land Total FMV $ 60,000 450,000 690,000 $ 1,200,000 Adjusted Tax Basis $ 30,000 300,000 900,000 $ 1,230,000 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 $1,100,000. The transaction met the requirements to be tax-deferred under $351. Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Required: a. What amount of gain or loss does Zhang realize on the transfer of the property to the corporation? b. What amount of gain or loss does Zhang recognize on the transfer of the property to the corporation? c. What is Zhang's tax basis in the stock received in the exchange? d. What is the corporation's adjusted tax basis in each of the assets received in the exchange? e. 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. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts? f. 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 Zhang's tax basis in the stock received in the exchange? a Assume the corporation assumed a mortgage of $1.300.000 attached to the building and land. Assume the fair market value of the
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: Inventory Building Land Total FMV $ 60,000 450,000 690,000 $ 1,200,000 Adjusted Tax Basis $ 30,000 300,000 900,000 $ 1,230,000 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 $1,100,000. The transaction met the requirements to be tax-deferred under $351. Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Required: a. What amount of gain or loss does Zhang realize on the transfer of the property to the corporation? b. What amount of gain or loss does Zhang recognize on the transfer of the property to the corporation? c. What is Zhang's tax basis in the stock received in the exchange? d. What is the corporation's adjusted tax basis in each of the assets received in the exchange? e. 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. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts? f. 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 Zhang's tax basis in the stock received in the exchange? a Assume the corporation assumed a mortgage of $1.300.000 attached to the building and land. Assume the fair market value of the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Just need answers for e and g.
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:
Inventory
Building
Land
Total
FMV
$ 60,000
450,000
690,000
$ 1,200,000
Adjusted Tax
Basis
$ 30,000
300,000
900,000
$ 1,230,000
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 $1,100,000. The transaction met the requirements to be tax-deferred under $351.
Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.
Required:
a. What amount of gain or loss does Zhang realize on the transfer of the property to the corporation?
b. What amount of gain or loss does Zhang recognize on the transfer of the property to the corporation?
c. What is Zhang's tax basis in the stock received in the exchange?
d. What is the corporation's adjusted tax basis in each of the assets received in the exchange?
e. 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.
How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?
f. 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 Zhang's tax basis in the stock received in the exchange?
g. 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.
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