Question
The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $280,000 in return
The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $280,000 in return for 50 percent of the corporations stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporations stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.)
FMV | Adjusted Tax Basis | |
---|---|---|
Building | $ 105,000 | $ 28,000 |
Land | 245,000 | 112,000 |
Total | $ 350,000 | $ 140,000 |
To equalize the exchange, Wizard Corporation paid Hermione $70,000 in addition to her stock.
a. What amount of gain or loss does Ron realize on the formation of the corporation? What amount, if any, does he recognize?
[The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $280,000 in return for 50 percent of the corporations stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporations stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.)
FMV | Adjusted Tax Basis | |
---|---|---|
Building | $ 105,000 | $ 28,000 |
Land | 245,000 | 112,000 |
Total | $ 350,000 | $ 140,000 |
To equalize the exchange, Wizard Corporation paid Hermione $70,000 in addition to her stock.
b. What is Rons tax basis in the stock he receives in return for his contribution of property to the corporation?
[The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $280,000 in return for 50 percent of the corporations stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporations stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.)
FMV | Adjusted Tax Basis | |
---|---|---|
Building | $ 105,000 | $ 28,000 |
Land | 245,000 | 112,000 |
Total | $ 350,000 | $ 140,000 |
To equalize the exchange, Wizard Corporation paid Hermione $70,000 in addition to her stock.
c. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
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