Question
ACCT 540 Corporate Formations Problem Mary and Todd form the MT Corporation, with a transfer of the following properties: Mary $200,000 cash Todd $200,000 FMV
ACCT 540
Corporate Formations Problem
Mary and Todd form the MT Corporation, with a transfer of the following properties:
Mary $200,000 cash
Todd $200,000 FMV property
$35,000 tax basis
Mary will receive 50% and Todd 50% of the corporate stock.
Complete the following
Mary Todd
Realized gain ________ ________
Recognized gain ________ _________
Basis of Stock _________ _________
MT basis in contributed asset __________ _________
VARIATION 1: Return to original facts (same basis). Todds property is valued at $220,000 but is contributed subject to a $20,000 liability.(This means that Todd still contributes equity of $200,000 so it is still a 50/50 split of ownership.
Complete the following
Mary Todd
Realized gain ________ ________
Recognized gain ________ _________
Basis of stock _________ _________
MT basis in contributed asset __________ _________
VARIATION 2: Same as Variation 1 (same basis) except Todds property is valued at $260,000 and is contributed subject to a liability of $60,000. (Again, Todd contributes $200,000 of equity)
Complete the following
Mary Todd
Realized gain ________ ________
Recognized gain ________ _________
Basis of stock _________ _________
MT basis in contributed asset __________ _________
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