Problem 4-33 (LO. 1, 3) Ann and Bob form Robin Corporation. Ann transfers property worth $420,000...

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Problem 4-33 (LO. 1, 3) Ann and Bob form Robin Corporation. Ann transfers property worth $420,000 (basis of $150.000) for 20

business accounting

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Answer 1

Answer #1

This relates to exchange and control which is already given in question.

a.

Bob shall recognize the gain of $ 15,000. This is value of services Bob rendered to corporation. Bob shall not recognize transfer of property to corporation as no consideration received. Ann shall not recognize gain.

Ann recognizes (ordinary income or gain) of NIL Bob recognizes (ordinary income or gain) of $ 15,000

b.

Ann has basis of $ 150,000 in stock in Robin corporation.

Bob has basis of $ 30,000 i.e. basis in property transferred + gain recognized of $ 15,000 totaling to $ 45,000.

Ann has a basis of 150,000, while Bob has a basis of 45,000 in the stock.

c.

Ann has transferred property worth $ 150,000 to Robin corporation and Bob $ 30,000.

Hence, Robin corporation has total basis of $ 180,000 in property transferred. The corporation shall capitalize $ 15,000as the services received, totaling the basis to $ 195,000.

Robin Corporation has a basis of 150,000 in the property Ann transferred and a basis of 30,000 in the property Bob transferred.

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Answer 2

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Problem 4-33 (LO. 1, 3) Ann and Bob form Robin Corporation. Ann transfers property worth $420,000...

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