CH.8 Q. 33

Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporations stock. Hermione contributed a building and land with the following fair market values and adjusted bases in return for 50 percent of the corporations stock:

	FMV	Tax-Adjusted Basis
Building	$112,000	$28,000
Land	168,000	112,000
Total	$280,000	140,000

To equalize the exchange, Wizard Corporation paid Hermione $80,000 in addition to her stock.

g. What adjusted basis does Wizard Corporation take in the land and building received from Hermione? Assume Hermiones adjusted basis in the land was $200,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign) LAND? BUILDING? - Adjusted basis

h. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Assume Hermiones adjusted basis in the land was $280,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Gain or loss realized $ ? Gain or loss recognized $ ?

i. What adjusted basis does Wizard Corporation take in the land and building received from Hermione? Assume Hermiones adjusted basis in the land was $280,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) LAND? BUILDING? - Adjusted basis