Question

Mary and Todd from the MT Corporation, with a transfer of the following properties:

                Mary                                     $1,200,000 cash

               

                Todd                                      $800,000 FMV property

                                                                $300,000 tax basis

                                               

                                                                               

Mary will receive 60% and Todd 40% of the corporate stock.

Complete the following

                                                                                                Mary                                     Todd

                Realized gain                                                      ________                           ________

                Recognized gain                                                ________                           _________

                Basis of stock                                                     _________                         _________

                MT basis in contributed asset                     __________                       _________

VARIATION 2: Same as Variation 1 except Todd’s property is valued at $1,200,000 and is contributed subject to a liability of $400,000.

ACCT 540 Corporate Formation Problem Maryand Todd form the MT Corporation, with a transfer of the flowing properties Mary 51.200.000 Todd $800.000 FMV Bry $300.000 tab Mary will receive Go and Todos of the corporate stock Complete the following Realdan Recogidan Best of Stock Mbasis in costrud WRITION Return to original facts in Kartal Todd's property is walued $1,100,000 butis contributed subject to a $300.000 ability Complete the following Mari Todd Recognized pain Best of stock Mbasis in contributed WRITION 2: Same as Variation 1 except Todd's property is valued at $1.200,000 and is contributed subject to aby or 600,000.

Answer 1

Variation 1 Mary                                     Todd

                Realized gain                                                      _____Nil___                           ____Nil____

                Recognized gain                                                ____Nil____                           ____500,000_____

                Basis of stock                                                     _______1,200,000__                         ________800,000_

                MT basis in contributed asset                     ____1,200,000______                       ______800,000___

Variation 2

Mary                                     Todd

                Realized gain                                                      ____Nil____                           _______Nil_

                Recognized gain                                                _____Nil___                           ____Nil_____

                Basis of stock                                                     ______1,200,000___                         _______800,000__

                MT basis in contributed asset                     ______1,200,000____                       _______800,000__