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Mr. and Mrs. Meredith own a sole proprietorship consisting of business assets with a $649,000 aggregated...
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in...
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market value and adjusted basis. FMV Adjusted Basis Inventory $ 20,000 $ 11,000 Building 250,000 100,000 Land 530,000 300,000 Total $ 800,000 $ 411,000 The corporation also assumed a mortgage of $500,000 attached to the building and land. The fair market value of the...
Naomi incorporates her Sole Proprietorship, transferring its assets to a newly formed Ceasar Corporation. The assets...
Naomi incorporates her Sole Proprietorship, transferring its assets to a newly formed Ceasar Corporation. The assets transferred have an Adjusted Basis of $100,000 and a Fair Market Value of $250,000. Also transferred was $30,000 in liabilities, $25,000 of which was for personal (non-business) purposes and the remaining $5,000 being business related. In return for these transfers, Naomi receives all of the stock in Ceasar Corporation. Which of the following is correct? Ceasar Corporation will have a basis of $130,000 in...
Roy Rodgers, the owner of a sole proprietorship, is planning to incorporate his business. His capital...
Roy Rodgers, the owner of a sole proprietorship, is planning to incorporate his business. His capital account has a balance of $480,000 after revaluation of the assets. His cash account totals $80,000. He will receive 8 percent, $100 par-value preferred stock with a total par value equal to the cash transferred. The balance of his capital is to be exchanged for shares of $50 par-value common stock with a total par value equal to the remaining capital. How many shares...
Ms. Drake sold a business that she had operated as a sole proprietorship for 18 years....
Ms. Drake sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets: Tax Basis Accounts receivable $ 42,250 Inventory 149,600 Furniture and equipment: Cost 63,750 Accumulated depreciation (51,000 ) Leasehold improvements: Cost 23,000 Accumulated amortization (4,600 ) Required: The purchaser paid a lump-sum price of $316,500 cash for the business. The sales contract stipulates that the FMV of the business inventory is $154,000, and...
Mackenzie incorporates her sole proprietorship, transferring it to newly formed Omega Corporation. The assets transferred have...
Mackenzie incorporates her sole proprietorship, transferring it to newly formed Omega Corporation. The assets transferred have an adjusted basis of $300,000 and a fair market value of $400,000. Also transferred was $50,000 in liabilities, $5,000 of which was personal and the balance of $45,000 being business related. In return for these transfers, Mackenzie receives all of the stock in Omega Corporation. None of the above Omega Corporation has a basis of $305,000 in the property. Omega Corporation has a basis...
Required information The following information applies to the questions displayed below.) Ivan incorporated his sole proprietorship...
Required information The following information applies to the questions displayed below.) Ivan incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted bases: Inventory Building Land Total FMV $ 19,600 83,500 78,250 $181,350 Adjusted Basis $ 37,250 54,750 40,250 $132,250 The fair market value of the corporation's stock received in the exchange equaled...
Josie has operated a successful doll manufacturing business as a sole proprietorship since 2016. She plans...
Josie has operated a successful doll manufacturing business as a sole proprietorship since 2016. She plans on incorporating the business on January 1, 2019 by transferring the following assets; Cash $ 1,000,000 Inventory FMV $ 4,000,000 Tax Basis $3,000,000 Manufacturing Equipment (7-year MACRS property) FMV $ 5,000,000, Cost when purchased in 2016 $8,000,000, Accumulated depreciation on December 31, 2018 is $6,250,800 calculated as follows: Cost in 2016 Bonus Depreciation (2016) MACRS Depreciation (2016) $ 4,000,000 X.1429 MACRS Depreciation (2017) 4,000,000...
Brian incorporates his sole proprietorship as Fancy Corporation and transfers its assets to Fancy in exchange...
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...
Treetop Inc. (Treetop) has 19,700 shares of common stock outstanding. Alice, an individual, owns 7,092 of Treetop's sha...
Treetop Inc. (Treetop) has 19,700 shares of common stock outstanding. Alice, an individual, owns 7,092 of Treetop's shares (worth $1,419,840) and has a total adjusted basis of $1,618,600 in those shares. Harold, another individual, owns the remaining 12,608 shares in Treetop (worth $2,524,160), and Harold has a total adjusted basis of $2,347,500 in the shares. Treetop has assets with a total fair market value of $4,100,000 and total adjusted basis of $2,620,000. Treetop's assets consist of business operating assets, which...
Several years ago, your client, Brooks Robertson, started an office cleaning service. His business was very...
Several years ago, your client, Brooks Robertson, started an office cleaning service. His business was very successful owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, "The Human Vacuum Cleaner." Brooks operated his business as a sole proprietorship and used the cash method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprietorship and that he should incorporate to limit...
Required information The following information applies to the questions displayed below.) Ivan incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted bases: Inventory Building Land Total FMV $ 19,600 83,500 78,250 $181,350 Adjusted Basis $ 37,250 54,750 40,250 $132,250 The fair market value of the corporation's stock received in the exchange equaled...
Josie has operated a successful doll manufacturing business as a sole proprietorship since 2016. She plans on incorporating the business on January 1, 2019 by transferring the following assets; Cash $ 1,000,000 Inventory FMV $ 4,000,000 Tax Basis $3,000,000 Manufacturing Equipment (7-year MACRS property) FMV $ 5,000,000, Cost when purchased in 2016 $8,000,000, Accumulated depreciation on December 31, 2018 is $6,250,800 calculated as follows: Cost in 2016 Bonus Depreciation (2016) MACRS Depreciation (2016) $ 4,000,000 X.1429 MACRS Depreciation (2017) 4,000,000...
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...
Treetop Inc. (Treetop) has 19,700 shares of common stock outstanding. Alice, an individual, owns 7,092 of Treetop's shares (worth $1,419,840) and has a total adjusted basis of $1,618,600 in those shares. Harold, another individual, owns the remaining 12,608 shares in Treetop (worth $2,524,160), and Harold has a total adjusted basis of $2,347,500 in the shares. Treetop has assets with a total fair market value of $4,100,000 and total adjusted basis of $2,620,000. Treetop's assets consist of business operating assets, which...
Several years ago, your client, Brooks Robertson, started an office cleaning service. His business was very successful owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, "The Human Vacuum Cleaner." Brooks operated his business as a sole proprietorship and used the cash method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprietorship and that he should incorporate to limit...
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