Question

sorry for the marks I didn't want to get in trouble for copyright. the purple all belong to the same person and so do the red. * the columns should be purple and red - i just need all that info answered for both* the yellow is just the corporation name. thanks

Required Information The following information applies to the questions displayed below.) b e formed a corporatio Den Inc.) on October 31 to develop a drug to address split personalities. a ll will contribute a patented formula valued at $244,000 in return for 50 percent of the stock in the corporal will contribute an experimental formula worth $142,000 and medical services in exchange for the remaining stock tax basis in the patented formula is $152,500, whereas has a basis of $17,750 in his experimental formula. (Leave no answer blank. Enter zero if applicable.) a. Describe the tax consequences of the transaction. Describe the tax consequences of the transaction in terms of inces Realized gain Realized compensation Recognized gain Recognized compensation Basis of stock received

Answer 1

a. Describe the tax consequences of the transaction.

Refer to the below image for more detailed solution.

Deportement Describe the tax consequences of the transaction : Answer. Jekyll realizes a gain of $91500 [fair market value of & 244000 less his basis of $152500] • Hyde realizes a gain of & 124250 [fair market value of & 142000 less his basis of $17750], and a compensation of & 102000 [me remaining value of the thalloween Stock ine (1244000 - 4142000). Neither Jekyll nor Hyde recognises their gains because the formation of the corporation qualities for deffaral under $351 (both transfer property to the corporation and together the transferors control the cosporation immediately after the exchange). However, tyde will recognize 9 102000 of compensation (which will be dedutible by the corporation) Jekyll & Hyde will have a basis in their Halloween store of a 152500 and { 119450 respectively tryde's basis is the carryover of $17750 plus of income of & 102000 recognized on the transfer. — — — —