Callie incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in...
Callie 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 tax
bases:
| Tax | |||||
| FMV | Basis | ||||
| Inventory | $ | 34,500 | $ | 17,000 | |
| Building | 193,000 | 147,000 | |||
| Land | 321,750 | 329,000 | |||
| Total | $ | 549,250 | $ | 493,000 | |
The corporation also assumed a mortgage of $135,750 attached to the
building and land. The fair market value of the corporation’s stock
received in the exchange was $413,500. (Negative amounts
should be indicated by a minus sign. Leave no answer blank. Enter
zero if applicable.)
a. What amount of gain or loss does Callie realize on the transfer of the property to her corporation?
b. What amount of gain or loss does Callie recognize on the transfer of the property to her corporation?
c. What is Callie's basis in the stock she receives in her corporation?
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