Scott incorporates his sole proprietorship as Superior Corporation and transfers its assets to Superior in exchange for all 100 shares of Superior stock and four $7,500 interest-bearing notes. The stock has a $130,000 FMV. The notes mature consecutively on the first four anniversaries of the incorporation date. The assets transferred are as€‹ follows:

Requirement a.
What are the amounts and character of t Scott€‹'s recognized gains or€‹ losses? Complete the table to determine the amount and character of Scott€‹'s recognized gain or loss for each asset type. If an asset does not have a gain or€‹ loss, select€‹ "N/A" for the character type.
Requirement b.
What is Scott€‹'s basis in the Superior stock and€‹ notes? Begin by determining the adjusted basis of the stock.
Adjusted basis of Property transferred to the corporation
Plus...........................................Gain recognized by transferor
Minus..........................................FMV of Boot Received
Adjusted basis of stock
Requirement c. What is Superior€‹'s basis in the property received from Scott€‹?

Transcribed Image Text:

Adjusted Basis Assets FMV Cash 14400 14400 Equipment 135000 Minus: Accumulated (65000) 70000 60800 Depreciation Building 85000 35000 51200 Minus: Accumulated (50000) Depreciation 25600 Land 33600 Total 45000 160000