Several years ago, your client, Brooks Robertson, started an office cleaning service. His business was very successful, owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, "The Human Vacuum Cleaner." Brooks operated his business as a sole proprietorship and used the cash method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprietorship and that he should incorporate to limit his liability. Brooks has come to you for advice on the tax implications of incorporation. His balance sheet is presented below. Under the terms of the incorporation, Brooks would transfer the assets to the corporation in return for 100 percent of the company's common stock. The corporation would also assume the company's liabilities (payables and mortgage). Assets Accounts receivable Cleaning equipment (net) Building Land Total assets Liabilities Accounts payable Salaries payable Balance Sheet Adjusted tax basis FMV $ 0 30,000 60,000 30,000 $ 10,000 25,000 80,000 55,000 $ 120,000 $ 170,000 $ 0 0 40,000 $ 15,000 10,000 40,000 $ 40,000 $ 65,000 Mortgage on land and building Total liabilities Required: Answer the following questions: a. How much gain or loss (on a per-asset basis) does Brooks realize on the transfer of each asset to the corporation? b. How much, if any, gain or loss (on a per-asset basis) does Brooks recognize? c. How much gain or loss, if any, must the corporation recognize on the receipt of the assets of the sole proprietorship in exchange for the corporation's stock? d. What tax basis does Brooks have in the corporation's stock? e. What is the corporation's adjusted tax basis in each asset it receives from Brooks? Req A Req B Req C to D Req E Req A Req B Req C to D Req E How much gain or loss (on a per-asset basis) do amounts should be indicated by a minus sign. Lea (on a per-asset basis) How much, if any, gain or loss (on a per-asset ba minus sign. Leave no answer blank. Enter zero if Recognized gain/loss Accounts receivable Realized gain/loss Accounts receivable $ 0 Equipment Building Land Total $ Equipment Building Land Total $ 0 Req A Req B Req C to D Req A Req E Req B Req C to D Req E c. How much gain or loss, if any, must the corpo exchange for the corporation's stock? d. What tax basis does Brooks have in the corpo (For both requirements, negative amounts shoul applicable.) c. Gain or loss recognized d. Tax basis What is the corporation's adjusted tax basis in ea a minus sign. Leave no answer blank. Enter zero i Tax Basis Accounts receivable Equipment $ 25,000 Building 60,000 Land 30,000 Total S 115,000