1.) Roscoe contributes a personal use asset, adjusted basis $34,800 and fair market value $62,640, to a new business in which he is an owner. Determine Roscoe's recognized gain on the transfer and the basis of the asset to the business if the new operation is a:

a. Sole proprietorship : The sole proprietorship's basis for the asset is $ fill in the blank

b. Partnership in which Roscoe holds a 60% interest : The partnership's basis for the asset is $ fill in the blank

c. Corporation in which Roscoe holds a 45% interest and all shareholders contribute assets for stock in the transaction.

The corporation's basis for the asset is $ fill in the blank

2.) Mira and Lemma are equal owners of a business entity. Each contributed $120,000 cash to the business. Then the entity acquired a $480,000. loan from a bank. This year operating profits totaled $144,000. Determine Lemma's basis in her interest at the end of the tax year assuming that the entity is a partnership, a C corporation, or a S corporation.

a. If the entity is a partnership, Mira and Lemma each have a basis of $ fill in the blank at the end of the year.

b. If the entity is a C corporation, Mira and Lemma each have a basis of $fill in the blank at the end of the year.

c. If the entity is an S corporation, Mira and Lemma each have a basis of $fill in the blank at the end of the year.

3.)Carlota and Dave formed an S corporation; Carlota owns 75% of the out-standing shares, and Dave owns the rest. When the entity's AAA balance is $1,000,000, it distributes an asset to each shareholder; the basis of each asset to the corporation is $152,500. Carlota's asset is worth $213,500, and Dave's is worth $183,000.

a. How much gain, if any, does the the corporation recognize as a result of the distribution? $fill in the blank

b. By how much, if any, does the distribution increase Dave's gross income? $ fill in the blank

c. By how much, if any, does the distribution increase Carlota's gross income? $ fill in the blank

4.)Sea Green Enterprises reports the following assets and liabilities on its balance sheet.

	Net Book Value	Fair Market Value
Assets	$315,000			$472,500
Liabilities	94,500			94,500

Sea Green just lost a product liability lawsuit, with damages of $4,725,000 being awarded to the plaintiff. Although Sea Green will appeal the judgment, legal counsel indicates the judgment is highly unlikely to be overturned by the appellate court. The product liability insurance carried by Sea Green has a policy ceiling of $2,835,000.

Assume any net assets of the company will be used to reduce the judgment.

What is the amount of liability of Sea Green Enterprises and its owners if the business entity is a sole proprietorship, a partnership, a C corporation, and an S corporation?

If an amount is zero, enter "0".

a. If the form of the business entity is a sole proprietorship, the owner is ultimately liable for :

$ fill in the blank .

b. If the form of the business entity is a partnership, the partnership and the general partners are ultimately liable for: $ fill in the blank

c. If the form of the business entity is an LLC, legal liability for its debts

is limited to its assets

. Therefore, the members of the LLC

have no

personal liability for the : $ fill in the blank