question 1

Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $240,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $240,000 and a tax basis of $160,000 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain is each owner required to recognize under each of the following alternative situations? [Hint: Look at 351 and 721.](Leave no answer blank. Enter zero if applicable.)

rev: 02_22_2020_QC_CS-201869

Problem 4-56 Part a

a.MMT is formed as a C corporation.

Mickey _____________

Mickayla____________

Taylor_____________

question 2

Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $240,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $240,000 and a tax basis of $160,000 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain is each owner required to recognize under each of the following alternative situations? [Hint: Look at 351 and 721.](Leave no answer blank. Enter zero if applicable.)

rev: 02_22_2020_QC_CS-201869

Problem 4-56 Part b

b.MMT is formed as an S corporation.

Mickey _____________

Mickayla____________

Taylor_____________

question 3 [The following information applies to the questions displayed below.]

Mickey, Mickayla, and Taylor are starting a new business (MMT). To get the business started, Mickey is contributing $240,000 for a 40 percent ownership interest, Mickayla is contributing a building with a value of $240,000 and a tax basis of $160,000 for a 40 percent ownership interest, and Taylor is contributing legal services for a 20 percent ownership interest. What amount of gain is each owner required to recognize under each of the following alternative situations? [Hint: Look at 351 and 721.](Leave no answer blank. Enter zero if applicable.)

rev: 02_22_2020_QC_CS-201869

Problem 4-56 Part c

c.MMT is formed as an LLC.

Mickey _____________

Mickayla____________

Taylor_____________

question 4 [The following information applies to the questions displayed below.]

Rondo his business associate, Larry, are considering forming a business entity called R&L but they are unsure about whether to form it as a C corporation, an S corporation, or an LLC taxed as a partnership. Rondo Larry would each invest $100,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $100,000 no matter which entity type is formed. Shortly after the formation of the entity, the business borrowed $40,000 from the bank. If applicable, this debt will be shared equally between the two owners.

Problem 4-58 Part a

a.After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as a C corporation?

Rondos tax basis____________

question 5

Rondo his business associate, Larry, are considering forming a business entity called R&L but they are unsure about whether to form it as a C corporation, an S corporation, or an LLC taxed as a partnership. Rondo Larry would each invest $100,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $100,000 no matter which entity type is formed. Shortly after the formation of the entity, the business borrowed $40,000 from the bank. If applicable, this debt will be shared equally between the two owners.

Problem 4-58 Part b

b.After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as an S corporation?

question 6

Rondo his business associate, Larry, are considering forming a business entity called R&L but they are unsure about whether to form it as a C corporation, an S corporation, or an LLC taxed as a partnership. Rondo Larry would each invest $100,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $100,000 no matter which entity type is formed. Shortly after the formation of the entity, the business borrowed $40,000 from the bank. If applicable, this debt will be shared equally between the two owners.

Problem 4-58 Part c

c.After taking the loan into account, what is Rondo's tax basis in his R&L ownership interest if R&L is formed as an LLC and taxed as a partnership?