In the current year, MickMick, JayJay, and FionaFiona form AresAres Corporation. MickMick contributes land (a capital asset) having a $ 37 comma 500$37,500 FMV in exchange for 150150 shares of AresAres stock. He purchased the land three years ago for $ 110 comma 000$110,000. JayJay contributes machinery (Sec. 1231 property purchased four years ago) having a $ 50 comma 000$50,000 adjusted basis and a $ 22 comma 500$22,500 FMV in exchange for 120120 shares of AresAres stock. FionaFiona contributes services worth $ 15 comma 000$15,000 in exchange for 3030 shares of AresAres stock.
a.
What is the amount of MickMick's recognized gain or loss?
b.
What is MickMick's basis in his AresAres shares? When does his
holding period begin?
c.
What is the amount of JayJay's recognized gain or loss?
d.
What is JayJay's basis in his AresAres shares? When does his
holding period begin?
e.
How much income, if any, does FionaFiona recognize?
f.
What is FionaFiona's basis in her AresAres shares? When does her
holding period begin?
g.
What is AresAres's basis in the land and the machinery? When does
its holding period begin? How does AresAres treat the amount paid
to FionaFiona for her services?
a. MickMick realizes $72,500 loss and recognizes no gain or
loss.
What is the amount of MickMick's recognized gain or loss?
b. Mickmick basis in his AresAres shares is $110,000 and holding
period begins three years ago.
What is MickMick's basis in his AresAres shares? When does his
holding period begin?
c. Jayjay realizes $27,500 loss and recognizes no gain or
loss
What is the amount of JayJay's recognized gain or loss?
d. Jayjay's basis in his Aresares shares is $50,000 begins four
years ago.
What is JayJay's basis in his AresAres shares? When does his
holding period begin?
e.Fiona realizes a $15,000 gain and recognizes ordinary income of
$15,000
How much income, if any, does FionaFiona recognize?
f. Fiona basis in Ares shares is $15,000 and holding period begins
the day after the exchange date.
What is FionaFiona's basis in her AresAres shares? When does her
holding period begin?
g. Ares basis in land is $37,500 and Ares holding period begins the
day after the exchange date,
Ares basis in machinery is $22,500 and Ares holding period begins the day after the exchange date.
Ares basis in service would be $15,000 and if the services are being capitalized and holding period begins the day after the exchange date
What is AresAres's basis in the land and the machinery? When does
its holding period begin? How does AresAres treat the amount paid
to FionaFiona for her services?
In the current year, MickMick, JayJay, and FionaFiona form AresAres Corporation. MickMick contributes land (a capital...
In the current year, Mick Hank, and Lulu form Hades Corporation Mick contributes land (a capital asset) having a $125.000 FMV in exchange for 145 shares of Hades stock. He purchased the land three years ago for $140,000. Hank contributes machinery (Sec 1231 property purchased four years ago) having a $130,000 adjusted basis and a $75,000 FMV in exchange for 105 shares of Hades stock. Lulu contributes services worth $50,000 in exchange for 40 shares of Hades stock Read the...
In the current year, Mick, Hank, and Lulu form Hades Corporation Mick contributes land (a capital asset) having a $125,000 FMV in exchange for 145 shares of Hades stock. Ho purchased the land three years ago for $140,000 Hank contributos machinery (Sec. 1231 property purchased four years ago) having a $130,000 adjusted basis and a $75,000 FMV in exchange for 105 shares of Hades stock Lulu contributes services worth $50,000 in exchange for 40 shares of Hades stock Read the...
PROBLEM This year, John, Meg, and Karen form Frost Corporation. John contributes land purchased as an investment four years ago for $25,000 that has a $30,000 FMV in exchange for 30 shares of Frost stock. Meg contributes machinery purchased four years ago and used in her business having a $50,000 adjusted basis and a $30,000 FMV in exchange for 30 shares of Frost stock. Karen contributes services worth $19,500 and $500 cash in exchange for 20 shares of Frost stock....
PROBLEM : This year, John, Meg, and Karen form Frost Corporation. John contributes land purchased as an investment four years ago for $25,000 that has a $30,000 FMV in exchange for 30 shares of Frost stock. Meg contributes machinery purchased four years ago and used in her business having a $50,000 adjusted basis and a $30,000 FMV in exchange for 30 shares of Frost stock. Karen contributes services worth $19,500 and $500 cash in exchange for 20 shares of Frost...
In the current year, Mick, Hank, and form Hades Corporation Mick contributes and a capital asset) having a $125,000 EMV in exchange for 145 shares of Hades stock He purchased the land three years for $140 000 Hank contributes machinery (See 1231 property purchased four years ) having a $130 000 adjusted basis and a $75 000 FMV in exchange for 105 shares of Hades stock contributes Services worth $50 000 in exchange for 40 shares of Hades stock Read...
In the current year, Matt, Tam, and Chris form Air Corporation. Matt contributes land (a capital asset) having a $60,000 FMV purchased as an investment four years ago for $55,000 in exchange for 60 shares of Air stock. Tam contributes machinery (Sec. 1231 property) purchased four years ago and used in her business in exchange for 60 shares of Air stock. Immediately before the exchange, the machinery had a $100.000 adjusted basis and a 60.000 FMV. Chris contributes services worth...
Pete, Kaley, and George form Joker Corporation. Pete contributes land (a capital asset) having a $5,000 adjusted basis and a $13,000 FMV to Joker in exchange for Joker twenty-year notes having a $13,000 face value. Kaley contributes equipment (Sec. 1231 property) having a $21,000 adjusted basis and a $27,000 FMV for 80 shares of Joker stock. She previously claimed $7,500 of depreciation on the equipment. George contributes $26,000 cash for 80 shares of Joker stock. Read the requirements. Requirement a....
Sheila transfers to Poseidon Corporation $9,000 cash and machinery having an $11,000 basis and a $26,000 FMV in exchange for 60 shares of Poseidon stock. The machinery was used in Sheila's business, originally cost Sheila $37,000, and is subject to a $21,000 liability, which Poseidon assumes. Tom exchanges $14,000 cash for the remaining 60 shares of Poseidon stock. a. What are the amount and character of Sheila's recognized gain or loss? b. What is Sheila's basis in the Poseidon stock?...
Jay owns 80% of Crystal Corporation stock. He transfers a business automobile to Crystal in exchange for additional Crystal stock worth $12,000 and Crystal's assumption of both his $2,500 automobile debt and his $5,500 education loan. The automobile originally cost Jay $22,000 and, on the transfer date, has a $10,500 adjusted basis and a $20,000 FMV. Read the requirements. Requirement a. What are the amount and character of Jay's recognized gain or loss? Jay realizes a C D and recognizes...
Jordan owns 80% of Ruby Corporation stock. He transfers a business automobile to Ruby in exchange for additional Ruby stock worth $12,000 and Ruby's assumption of both his $3,500 automobile debt and his $1,500 education loan. The automobile originally cost Jordan $22,000 and, on the transfer date, has a $7,500 adjusted basis and a $17,000 FMV Read the requirements. Requirement a. What are the amount and character of Jordan's recognized gain or loss? Jordan realizes a D and recognizes a...