Question
Please show all detailed calculations: PK Corporation transfers a factory to a newly formed Corporation in exchange for all of its stock. The factory has
Please show all detailed calculations:
PK Corporation transfers a factory to a newly formed Corporation in exchange for all of its stock. The factory has an adjusted basis of $3,000,000 and a fair market value of $10,000,000. The factory is subject to an outstanding mortgage of $2,000,000. The stock received by Rk has a fair market value of $8,000,000.
1. What is Rk's basis in the stock?
2. What is the corporation's basis in the factory from the previous question
3. Assume the mortgage in question 32 is $6,000,000. All other facts are the same. What is Rk's basis in the stock of Newco?
4. What is the Corporation's basis in the factory above with a mortgage of $6,000,000?
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