Question

Benny receives 40 shares of Cougar Corporation Stock with a fair value of $540,000 plus $60,000...

Benny receives 40 shares of Cougar Corporation Stock with a fair value of $540,000 plus $60,000 cash in exchange for his transfer of inventory, a building, and land to Cougar. Assume the rules of §351 were met and all property is free of liabilities. The property transferred to the corporation had the following fair market value and adjusted bases:

FMV ADJ. TAX BASIS GAIN REALIZED
INVENTORY $70,000 $65,000

$5,000
BUILDING $380,000 $330,000 $50,000
LAND $150,000 $105,000 $45,000
TOTAL $600,000 $500,000 $100,000

1. What is Benny’s recognized gain on this transfer?

2. What is Benny’s adjusted tax basis in the Cougar Stock after the transfer? Show your calculations!

3. What is Benny’s adjusted tax basis in the land after the transfer?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
van incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in...
van 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: FMV Adjusted Basis Inventory $ 16,500 $ 26,250 Building 60,000 56,750 Land 62,750 51,000 Total $ 139,250 $ 134,000 The fair market value of the corporation’s stock received in the exchange equaled the fair market value of the assets transferred to...
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                  $   9,000                         Building                   250,000                  100,000                         Land                        530,000                   300,000                         Total                      $ 800,000               $ 409,000           The corporation also assumed a mortgage of $500,000 attached to the building and land. The fair market value of the...
hang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in...
hang 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                  $   9,000                         Building                   250,000                    100,000                         Land                        530,000                   300,000                         Total                      $ 800,000               $ 409,000           The corporation also assumed a mortgage of $500,000 attached to the building and land. The fair market value of the corporation’s stock received in the exchange was $300,000. The...
Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in...
Carla 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 values and adjusted bases: FMV Adjusted Basis Inventory $ 27,250 $ 12,500 Building 180,000 113,250 Land 304,500 316,000 Total $ 511,750 $ 441,750 The corporation also assumed a mortgage of $188,250 attached to the building and land. The fair market value of the corporation’s stock...
Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in...
Carla 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 values and adjusted bases: FMV Adjusted Basis Inventory $ 34,500 $ 17,000 Building 193,000 147,000 Land 321,750 329,000 Total $ 549,250 $ 493,000 The corporation also assumed a mortgage of $135,750 attached to the building and land. The fair market value of the corporation’s stock...
Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in...
Ramon 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: FMV Adjusted Basis Inventory $ 14,500 $ 5,600 Building 61,000 52,000 Land 156,000 55,500 Total $ 231,500 $ 113,100 The fair market value of the corporation’s stock received in the exchange equaled the fair market value of the assets transferred to...
Samantha, in exchange for a corporation’s stock, transfers a building and land with an adjusted tax...
Samantha, in exchange for a corporation’s stock, transfers a building and land with an adjusted tax basis of $600,000 and $200,000, respectively when the fair value of this property was $800,000 and $200,000, respectively. After the transfer, Samantha owns over 80% of the outstanding stock in the corporation. In exchange for the transfer of property, Samantha received stock with a fair value of $900,000 and $100,000 cash. What should Samantha report on her Form 1040 for the year of the...
Samantha, in exchange for a corporation’s stock, transfers a building and land with an adjusted tax...
Samantha, in exchange for a corporation’s stock, transfers a building and land with an adjusted tax basis of $600,000 and $200,000, respectively when the fair value of this property was $800,000 and $200,000, respectively. After the transfer, Samantha owns over 80% of the outstanding stock in the corporation. In exchange for the transfer of property, Samantha received stock with a fair value of $900,000 and $100,000 cash. What should Samantha report on her Form 1040 for the year of the...
Kion and Simba formed Lion Inc., a C-Corporation. Kion transfers land (FMV 650,000 and adjusted basis...
Kion and Simba formed Lion Inc., a C-Corporation. Kion transfers land (FMV 650,000 and adjusted basis of $350,000) for 50% of the stock in the corporation. Simba transfers equipment (FMV 350,000 adjusted basis of $200,000) and will provide management services worth $250,000 after Lion Inc. opens for business for 50% of the stock in the corporation. a. Will the transfer qualify under §351 as a tax free transfer? Explain. b. What are the tax consequences to Kion and Simba including...
[The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on...
[The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation’s stock. Hermione contributed a building and land with the following fair market values and adjusted bases in return for 50 percent of the corporation’s stock: FMV Tax-Adjusted Basis Building $ 75,000 $ 20,000 Land 175,000 80,000 Total $ 250,000 $ 100,000 To equalize the exchange, Wizard Corporation paid Hermione...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT