Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percentof the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted tax bases:InventoryBuildingLandTotalFMV$ 20,000150,000230,000Adjusted TaxBasis$ 10,000100,000300,000$ 400,000$ 410,000The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation'sstock received in the exchange was $300,000. 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 $500,000 attached to the building and land. Assume the fair market value of thebuilding is now $250,000 and the fair market value of the land is $530,000. The fair market value of the stock remains $300,000.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 $500,000 attached to the building and land. Assume the fair market value of thebuilding is now $250,000 and the fair market value of the land is $530,000. The fair market value of the stock remains $300,000.What is Zhang's tax basis in the stock received in the exchange?g. Assume the corporation assumed a mortgage of $500,000 attached to the building and land. Assume the fair market value of thebuilding is now $250,000 and the fair market value of the land is $530,000. The fair market value of the stock remains $300,000.What is the corporation's adjusted tax basis in each of the assets received in the exchange?Note: Do not round intermediate calculations.

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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 Basis Inventory Building Land Total FMV $ 20,000 150,000 230,000 $ 400,000 $ 10,000 100,000 300,000 $410,000 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 $300,000. 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?

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 Basis Inventory Building Land Total FMV $ 20,000 150,000 230,000 $ 400,000 $ 10,000 100,000 300,000 $410,000 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 $300,000. 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?

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 and B form A and B corporation. A transferred a lot located in Western Maryland that has a Fair Market Value of $250,000 and a basis of $50,000 for fifty-percent of the stock in A and B. B transferred a building with a Fair Market Value (FMV) of $120,000 and a basis of $24,000. B also provided services worth $10,000 for 50% of the stock of A and B. Question: What are the tax consequences to A and to B as a result of these transactions? Be sure to discuss whether (a) Section 351 applies and the reason(s); and (b) what gain or loss or income if any that A and B would recognize as a consequence of these transactions?
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Parent Corporation purchased 80 percent of the stock of Subsidiary Corporation in one transaction for $200,000. The remaining 20 percent is owned by the MAC partnership. Subsidiary's only asset is an office building depreciated on the straight-line method, with an adjusted basis of $50,000 and a value of $400,000. It is subject to a mortgage of $140,000. a. If Parent makes a Code Sec. 338 election, what are the tax consequences to Parent, Subsidiary and MAC? b. If Parent does not make a Code Sec 338 election and liquidates Subsidiary under the Code Sec. 332, what are the tax consequences to Parent, Subsidiary, and MAC?
[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 tax bases: Inventory Building Land Adjusted Tax Basis $ 34,000 340,000 1,020,000 FMV $ 68,000 510,000 782,000 $ 1,360,000 $ 1,394,000 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 $1,260,000. 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.) Problem 08-40 Part d (Algo) d. What is the corporation's adjusted tax basis in each of the assets received in the exchange? Adjusted basis Land $
2. Ramon incorporated his 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: FMV Adjusted Tax Basis Inventory $ 10,000 $ 4,000 Building 50,000 30,000 Land 100,000 50,000 Total $ 160,000 $ 84,000 The fair market value of the corporation’s stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ramon. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) What amount of gain or loss does Ramon recognizeon the transfer of the property to his corporation?
Tesla Incorporated and BMW Company entered into an exchange of real property. Here is the information for the properties to be exchanged. Tesla: FMV $800,000 Adjustasted tax basis $600,000 Mortgage $ 170,000 BMW: FMV $715,000 Adjustasted tax basis $500,000 Mortgage $0 Pursuant to the exchange, BMW assumed the mortgage on the Teslas property. Compute Tesla's tax basis in the property received from BMW.
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 $ 1,120,000 $ 28,000 280,000 840,000 Inventory Building Land $ 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…
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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
Castle and Dave formed an S corporation that is owned as follows: Castle 75% and Dave 25%. The corporation distributes an asset to each owner. The corporation has a basis of $45,000 for each asset. The fair market value of each of the assets is as follows: Castle $90,000 and Dave $50,000. a. What is the recognized gain for the corporation? b. How much of the gain does Castle report? c. How much of the gain does Dave report?
3. Ramon incorporated his 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: FMV Adjusted Tax Basis Inventory $ 10,000 $ 4,000 Building 50,000 30,000 Land 100,000 50,000 Total $ 160,000 $ 84,000 The fair market value of the corporation’s stock received in the exchange equaled the fair market value of the assets transferred to the corporation by Ramon. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) What is Ramon’s basis in the stock he receives in his corporation?
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.