CH 8 Q 19 Sam and Devon agree to go into business together selling college licensed clothing According to the agreement, Sam will contribute inventory valued at $66,000 in return for 80 percent of the stock in the corporation Sams tax basis in the inventory is $42,000 Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures) The accounting services are valued at $16,500 (Leave no answer blank Enter zero if applicable Negative amounts should be indicated by a minus sign ) REQUIREDD (a h) a What amount of income gain or loss does Sam realize on the formation of the corporation What amount, if any, does he recognize Income, gain, or loss realized $ Income, gain, or loss recognized $ b What is Sams tax basis in the stock he receives in return for his contribution of property to the corporation c What amount of income, gain, or loss does Devon realize on the formation of the corporation What amount, if any, does he recognize Income, gain, or loss realized $ Income, gain, or loss recognized $ d What is Devons tax basis in the stock he receives in return for his contribution of services to the corporation e What amount of gain or loss does Sam recognize on the formation of the corporation Assume Devon received 25 percent of the stock in the corporation in return for his services f What is Sams tax basis in the stock he receives in return for his contribution of property to the corporation Assume Devon received 25 percent of the stock in the corporation in return for his services g What amount of income, gain, or loss does Devon recognize on the formation of the corporation Assume Devon received 25 percent of the stock in the corporation in return for his services (Do not round intermediate calculations Round your final answer to the nearest whole dollar amount ) h What is Devons tax basis in the stock he receives in return for his contribution of services to the corporation Assume Devon received 25 percent of the stock in the corporation in return for his services (Do not round intermediate calculations Round your final answer to the nearest whole dollar amount )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 09, 2024

CH.8 Q.19 Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $66,000

CH.8 Q.19

Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam will contribute inventory valued at $66,000 in return for 80 percent of the stock in the corporation. Sams tax basis in the inventory is $42,000. Devon will receive 20 percent of the stock in return for providing accounting services to the corporation (these qualify as organizational expenditures). The accounting services are valued at $16,500. (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.)

REQUIREDD!! (a-h)

a. What amount of income gain or loss does Sam realize on the formation of the corporation? What amount, if any, does he recognize?

Income, gain, or loss realized	$
Income, gain, or loss recognized	$

b. What is Sams tax basis in the stock he receives in return for his contribution of property to the corporation?

c. What amount of income, gain, or loss does Devon realize on the formation of the corporation? What amount, if any, does he recognize?

Income, gain, or loss realized	$
Income, gain, or loss recognized	$

d. What is Devons tax basis in the stock he receives in return for his contribution of services to the corporation?

e. What amount of gain or loss does Sam recognize on the formation of the corporation? Assume Devon received 25 percent of the stock in the corporation in return for his services.

f. What is Sams tax basis in the stock he receives in return for his contribution of property to the corporation? Assume Devon received 25 percent of the stock in the corporation in return for his services.

g. What amount of income, gain, or loss does Devon recognize on the formation of the corporation? Assume Devon received 25 percent of the stock in the corporation in return for his services. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)

h. What is Devons tax basis in the stock he receives in return for his contribution of services to the corporation? Assume Devon received 25 percent of the stock in the corporation in return for his services. (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.)