Question

Carlton Drake purchased the New York City Symbiotes, a major league baseball team, for $2 million. The appraised values of the identified assets are as follows: Stadium Prepaid season tickets $150,000 Player contracts500,000 Equipmen100,00 900,000 The Symbiotes are a highly successful team and won the pennant in the prior year. Determine Drake's adjusted basis for the assets of Symbiotes based upon the purchase price. (10 points)

Answer 1

Solution:

a
	Pariculars	Dr	Cr
	Land	150000
	Investment in shares	90000
	Contribution revenue		240000
	Holding period
		Date of purchase by Anne	Date of gift
	Land	28-Feb-15	30-Jun-18	For land, Holding period will start from receipt date of gift
	Stock	28-Feb-15	30-Jun-18	For land, Holding period will start from the date on which stock was purchased by Anne
b	Pariculars	Dr	Cr
	Land	90000
	Investment in shares	50000
	Contribution revenue		140000
c	Pariculars	Dr	Cr
	Cash	65000
	Gain on sale of stock		15000
	Stock		50000