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?
c.
What is Poseidon's basis in the machinery?
d.
What are the amount and character of Tom's recognized gain or
loss?
e.
What is Tom's basis in the Poseidon stock?
f.
When do Sheila and Tom's holding periods for their stock
begin?
g.
How would your answers to Parts a through f change if TomTom
received $14,000 of Poseidon stock for legal services (instead of
cash)?
Sheila transfers to Poseidon Corporation $9,000 cash and machinery having an $11,000 basis and a $26,000...
Brian transfers to Woodside Corporation property having a $33,000 adjusted basis and a $48,000 FMV in exchange for all of Woodside's stock worth $12,000 and Woodside's assumption of a $36,000 mortgage on the property. Read the requirements. Requirement a. What is the amount of Brian's recognized gain or loss? Brian realizes a(n) and recognizes a. b. ooo What is the amount of Brian's recognized gain or loss? What is Brian's basis in the Woodside stock? What is Woodside's basis in...
Brian incorporates his sole proprietorship as Fancy Corporation and transfers its assets to Fancy in exchange for all 100 shares of Fancy stock and five $12,000 interest-bearing notes. The stock has a(n) $120,000 FMV. The notes mature consecutively on the first five anniversaries of the incorporation date. The assets transferred are as follows: E: (Click the icon to view the asset information.) Read the requirements. Requirement a. What are the amounts and character of Brian's recognized gains or losses? Complete...
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....
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...
Wayne and Paul form ABC Corporation with the following investments. Wayne transfers machinery (basis of $40,000 and fair market value of $100,000), while Paul transfers land (basis of $20,000 and fair market value of $90,000) and services rendered (worth $10,000) in organizing the corporation. Each is issued 25 shares in ABC Corporation. With respect to the transfers: A. Wayne has no recognized gain; Paul recognizes income/gain of $80,000. B. Neither Wayne nor Paul has recognized gain or income on the...
Fred exchanges a piece of business land (FMV 90,000; adjusted basis $50,000) and cash $1,000 for another piece of business land (FMV 70,000; adjusted basis $30,000) and $10,000 cash. a. What is Fred’s realized gain/loss on the transaction? b. What is Fred’s recognized gain/loss on the transaction? c. What is Fred’s basis in the new land (land received)?
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...