Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show your work Chapter 19 Corporate Organization Exercise Kathy and Carl formed a corporation by each contributing an asset with a FMV of $50,000

Please show your workimage text in transcribedimage text in transcribedimage text in transcribed

Chapter 19 Corporate Organization Exercise Kathy and Carl formed a corporation by each contributing an asset with a FMV of $50,000 for half of the stock in the corporation. Prior to the transfer, Kathy had an adjusted basis of $40,000 in her asset and Carl had an adjusted basis of $60,000 in his asset. a. Does this exchange qualify for 351 treatment? Why? b. What is Kathy's realized gain on the transaction? c. What is Kathy's recognized gain on the transaction? d. What is Kathy's basis in her stock? e. What is the corporation's basis in Kathy's asset? f. What would Kathy's recognized gain/loss be if she sold her stock for $50,000? g. What would the corporation's recognized gain/loss be if it sold her asset for $50,000? Does Carl have any positive or negative consequences if the corporation sells Kathy's asset for $50,000? Quantify the impact assuming the corporation's marginal tax rate is 21%. h. Answer the following assuming Carl and the corporation did not make the election i. What is Carl's realized loss on the transaction? j. What is Carl's recognized loss on the transaction? k. What is Carl's basis in his stock? 1. What is the corporation's basis in Carl's asset? n. What would Carl's recognized gain loss be if he sold his stock for $50,000? n. What would the corporation's recognized gain/loss be if it sold his asset for $50,0003 Does Kathy have any positive or negative consequences if the corporation sells Carl's o. asset for $50,000? Quantify the impact assuming the corporation's marginal tax rate is 21%. Answer the following assuming Carl and the corporation did make the election p. What is Carl's realized loss on the transaction? q. What is Carl's recognized loss on the transaction? r. What is Carl's basis in his stock? s. What is the corporation's basis in Carl's asset? t. What would Carl's recognized gain/loss be if he sold his stock for $50,000? What would the corporation's recognized gain/loss be if it sold his asset for $50,000? u. Does Kathy have any positive or negative consequences if the corporation sells asset for $50,000? Quantify the impact assuming the corporation's marginal tax rate is 21%. v. Carl's

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Budgeting Auditing And Evaluation Functions And Integration In Seven Governments

Authors: Andrew Gray

1st Edition

0765807246, 9780765807243

More Books

Students also viewed these Accounting questions