Carla 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 $ 20,000 150,000 250,000 $ 420,000 $ 10,000 100,000 300,000 $410,000 The corporation also assumed a mortgage of $120,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $300,000. Required: a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation? b. What amount of gain or loss does Carla recognize on the transfer of the property to her corporation? c. What is Carla's basis in the stock received in the new corporation?
Carla 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 $ 20,000 150,000 250,000 $ 420,000 $ 10,000 100,000 300,000 $410,000 The corporation also assumed a mortgage of $120,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $300,000. Required: a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation? b. What amount of gain or loss does Carla recognize on the transfer of the property to her corporation? c. What is Carla's basis in the stock received in the new corporation?
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 62P
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Transcribed Image Text:Carla 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
$ 20,000
150,000
250,000
Adjusted Tax
Basis
$ 10,000
100,000
300,000
$ 420,000
$ 410,000
The corporation also assumed a mortgage of $120,000 attached to the building and land. The fair market value of the corporation's
stock received in the exchange was $300,000.
Required:
a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation?
b. What amount of gain or loss does Carla recognize on the transfer of the property to her corporation?
c. What is Carla's basis in the stock received in the new corporation?
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Required A
Required B
Required C
What amount of gain or loss does Carla realize on the transfer of the property to the corporation?
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT