Question
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporations stock. The
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporations stock. The property transferred to the corporation had the following fair market values and adjusted bases:
FMV | Adjusted Basis | ||||
Inventory | $ | 52,000 | $ | 26,000 | |
Building | 390,000 | 260,000 | |||
Land | 598,000 | 780,000 | |||
Total | $ | 1,040,000 | $ | 1,066,000 | |
|
The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporations stock received in the exchange was $940,000. The transaction met the requirements to be tax-deferred under 351. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
c. What is Zhangs tax basis in the stock she receives in the exchange?
Tax basis:
Assume the corporation assumed a mortgage of $1,140,000 attached to the building and land. Assume the fair market value of the building is now $650,000 and the fair market value of the land is $1,378,000. The fair market value of the stock remains $940,000.
e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?
Gain or loss recognized:
Assume the corporation assumed a mortgage of $1,140,000 attached to the building and land. Assume the fair market value of the building is now $650,000 and the fair market value of the land is $1,378,000. The fair market value of the stock remains $940,000.
f. What is Zhangs tax basis in the stock she receives in the exchange?
Assume the corporation assumed a mortgage of $1,140,000 attached to the building and land. Assume the fair market value of the building is now $650,000 and the fair market value of the land is $1,378,000. The fair market value of the stock remains $940,000.
g. What is the corporations adjusted basis in each of the assets received in the exchange? (Do not round intermediate calculations.)
Inventory | Building | Land |
Adjusted basis |
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