Question
Kelly,Tanya,and Barry form The Paint Corporation. Kelly transfers a building(A/B$5,000,FMV$90,000); Tanya invests$50,000cash and performs services worth$25,000. Barry transfers equipment(A/B$55,000,FMV$35,000)and land(A/B$40,000,FMV$40,000). They each receive50shares in The
Kelly,Tanya,and Barry form The Paint Corporation.
Kelly transfers a building(A/B$5,000,FMV$90,000);
Tanya invests$50,000cash and performs services worth$25,000.
Barry transfers equipment(A/B$55,000,FMV$35,000)and land(A/B$40,000,FMV$40,000).
They each receive50shares in The Paint Corporation,and each share is worth$1,500.
The corporation assumes a$15,000mortgage that Kelly owes on the building.
The mortgage has business purpose.
(a)What is Kelly's recognized gain?
(b)What is Kelly's stock basis?
(c)What is Tanya's stock basis?
(d)What is Barry's stock basis?
(e)What is the corporation's basis in the building?
(f)What is the corporation's basis in the equipment?
(g)What is the corporations' basis in the land?
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College Accounting Chapters 1-15
Authors: James A Heintz, Robert W Parry
19th Edition
0324376162, 978-0324376166
