Question
Lucia transferred equipment (adjusted basis of $100,000 and fair market value of $500,000) to Gamma Corporation. In return, Lucia received 80% of Gamma Corporation's stock
Lucia transferred equipment (adjusted basis of $100,000 and fair market value of $500,000) to Gamma Corporation. In return, Lucia received 80% of Gamma Corporation's stock (worth $320,000) and an automobile (fair market value of $60,000). In addition, there is an outstanding mortgage of $120,000, held for 5 years, on the building that Gamma Corporation assumed. With respect to this transaction:
| Lucia's recognized gain is $80,000. | ||
| Gamma Corporation's basis in the building is $100,000. | ||
| Lucia's recognized gain is $60,000. | ||
| Lucia has no recognized gain. | ||
| None of the above |
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Cornerstones of managerial accounting
Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
5th edition
978-1305302327, 130530232X, 978-1133943983
