Question
1.Rick transferred a building (FMV = $800,000; Adjusted Basis = $500,000) with a $350,000 mortgage attached to the building to Warbler Corporation in return for
1.Rick transferred a building (FMV = $800,000; Adjusted Basis = $500,000) with a $350,000 mortgage attached to the building to Warbler Corporation in return for $50,000 in cash plus 85% of Warbler Corporation's only class of stock.The stock had a FMV of $400,000 on the date of transfer.
a.Does this exchange qualify for 351 treatment?
Why? (Be specific; use complete sentences, good grammar & spelling)
b.What is Rick's realized gain on the exchange?
c.What is Rick's recognized gain on the exchange?
d.What is Rick's basis in Warbler's stock?
e.What is Warbler's basis in the building?
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Fundamental Managerial Accounting Concepts
Authors: Thomas P Edmonds, Philip R Olds
9th Edition
1259969509, 9781259969508
