42. Hester Co purchases a building by giving stock with a fair market value of $30000 (original cost was $21000) and borrowing $210000. Hester pays closing costs pf $10000 on the purchase. For property tax purposes, the land is assessed at $10000 and the building at $40000. Before buying the property, Hester hires an independent appraiser and receives appraisals of $21000 on the land and $279000 on the building. Compare initial bases of the properties using different allocation methods. What initial basis amounts should Hester use? Explain. Is there any other way to determine initial basis?

44. ABC co purchases all the assets of John's Saw Shop. Details on basis and fair market values of John's Saw Shop's assets are as follows:

Asset Adjusted Basis Fair Market Value

Inventory $10000 $27000

Machineray and equip $2000 $12000

Land $8000 $15000

Building $20000 $6000

a) What is ABC's basis in the assets purchased if ABC pays $40000 for them?

b) What is ABC's basis in the assets purchased if ABC pays $70000 for them?

c) What is ABC's basis if John's Saw Shop is a corporation and ABC purchases all John's stock for $60000?

25. Luana pay $40 per share for 100 shares of MANANO co common stock. At the end of the year, the market price of the stock is $60 per share. During the year, she receives a cash dividend of $4 per share. MANANO reports that $3 per share is taxable and $1 per share is a nontaxable dividend. What are the tax effects of these events?