Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for100 percent of the corporation's stock. The property transferred to the corporation had the following fair market valuesand adjusted bases:FMVAdjustedBasis60,000 $ 30,000InventoryBuildingLandTotal450,000690,000$1,200,000300,000900,000$1,230,000The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of thecorporation's stock received in the exchange was $1,100,000. The transaction met the requirements to be tax-deferredunder $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 $1,300,000 attached to the building and land. Assume the fair market value of thebuilding 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.e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?Gain or loss recognized

1. The total tax-adjusted basis of the property transferred to the corporation:Adjusted Basis of…

Answered: Zhang incorporated her sole…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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[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 adjusted bases: FMV Adjusted Basis Inventory $ 68,000 $ 34,000 Building 510,000 340,000 Land 782,000 1,020,000 Total $ 1,360,000 $ 1,394,000 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 $1,260,000. 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.) a. What amount of gain or loss does Zhang realize on the transfer of the property to her corporation? C. What is Zhang’s tax basis in the…
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(7) H Co acquires S Co for $1,040,000 when the balances of share capital and retained profits of S Co amount to respectively $450,000 and $360,000. S Co holds two properties which are depreciated over 10 years for both tax and accounting purposes, and will be recovered through use. The tax rate is 20%. The carrying amounts, fair values and tax bases of the net assets of S Co, and resulting temporary differences are shown below: All the timing differences are temporary differences. All the temporary differences are timing differences. If the differences between the carrying amount of an asset or liability and its tax base 2 Carrying Amount $ Fair Value $ Tax base $ Property 1 Property 2 Other net assets Total 320,000 390,000 400,000 420,000 90,000 90,000 810,000 900,000 300,000 450,000 90,000 840,000 According to the tax rules, the tax bases of the net assets of S Co are not changed when the net assets are acquired by H Co. What’s the amount of the goodwill? A.…
1. Blue Corporation distributes land and building having a $70,000 adjusted basis and a $200,000 FMV to its sole shareholder, Marina. Blue has current and accumulated E&P exceeding $200,000. The property is subject to a $120,000 mortgage, which Marina assumes. What is the amount of the taxable dividend received by Marina? Group of answer choices $80,000 $70,000 $0 $130,000
C owns depreciable property that originally cost $200,000 and has an undepreciated capital cost of $0. C sells the property to a corporation for $220,000 in exchange for debt of $0 and preferred shares of $220,000. C and the corporation will file a section 85 election with respect to the sale. What is the minimum elected transfer price under section 85?
(3) ABC Corporation distributes a building to Green, an individual and fifty (50) percent shareholder. The building has a FMV of $50,000 and an adjusted basis of $32,000. The building was encumbered by a $20,000 liability at the time of its distribution to Green. Without considering the distribution of the building to Green, ABC Corporation had earnings and profits of $26,500. Green adjusted basis in his interest in ABC Corporation was equal to $15,000. (a) What is the amount of the section 301 distribution to Green? (b) What is Green's basis in the building following its distribution to Green? (c) What is the amount of gain recognized by ABC Corporation as a result of the distribution of the building to Green? (d) What is the character of the distribution to Green and what is the amount of ABC's earnings and profits following the distribution?
A corporation is undergoing a complete liquidation. It distributes land to an individual shareholder in exchange for all of the shareholder's stock. The land has a fair market value (FMV) of $40,000 and an adjusted basis of $23,000. The shareholder's basis in the corporation's stock is $30,000. Which gain must this shareholder recognize on the distribution?
s) Last year Mustang Corporation acquired land in a Section 351 tax-free exchange. On the date of transfer, the land had a basis $360,000 and a FMV of $500,000.Mustang Corp. has two shareholders, Skylar and Mandy unrelated individuals. Skylar owns 80% of the stock in Mustang and Mandy owns 20%. The corporation adopts a plan of liquidation in the current year. On this date the value of the land has decreased to $250,000. What is the effect of each of the following on Mustang Corporation? A. Distribute all the land to Skylar. B. Distribute all the land to Mandy. C. Distribute 50% of the land to Skylar and 50% to Mandy.
Helen owns 30% of a flow-through entity. The capital gain comes from the sale of a piece of equipment that Helen contributed to the entity. At the time of contribution, the piece of equipment had a basis of $45,000 and a fair market value of $50,000. The entity reports the following amounts before any payments to the owners: O/S Item Amount Sales Revenue 30,000 Dividends received 10,000 Tax-exempt interest income 15,000 Capital gain 5,000 Charitable contributions 1,000 Cost of Goods Sold 10,000 General Business Expenses 3,000 a) In the O/S column above, write ‘O’ for any ordinary business items and write ‘S’ for any separately stated items. b) Assume that the entity is an S-Corp, and that Helen is also an employee of the…
Global Corporation distributed property with an $543,000 fair market value and a $298,650 adjusted basis to one of its shareholders. The property was subject to a $164,258 mortgage, which the shareholder assumed. Global has ample E & P to cover any distribution made during the year. What is the amount of the shareholder's dividend income on the distribution? 378,742 What is the shareholder's basis in the property received?
24) Individuals Opal and Ben form OB Corporation. Opal transfers land and a building with a $550,000 adjusted basis and a $625,000 FMV in exchange for 50% of the stock of the OB Corporation worth $610,000 and a $15,000 note. Ben transfers cash of $625,000 for 50% of the stock worth $610,000 and a note of the OB Corporation valued at $15,000. Opal's basis in the stock received is A) $560,000. B) $625,000. C) $610,000. D) $550,000.
Subject : Accounting

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