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Martin operates a law practice as a sole proprietorship using the cash method of accounting. Martin incorporates the law practice and transfers the following items
Martin operates a law practice as a sole proprietorship using the cash method of accounting. Martin incorporates the law practice and transfers the following items to a new, solely owned corporation.
Adjusted Basis | FMV | |
Cash Equipment Accounts receivable Accounts payable (deductible expenses) Note payable (on equipment) | $10,000 80,000 0 0 50,000 | $ 10,000 100,000 120,000 60,000 50,000 |
A. $20,000; $30,000
B. $0; $30,000
C. $20,000; $40,000
D. $0; $40,000
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