Question

Callie incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transferred to the corporation had the following fair market values and tax bases:

				Tax
	FMV			Basis
Inventory	$	34,500		$	17,000
Building		193,000			147,000
Land		321,750			329,000
Total	$	549,250		$	493,000

The corporation also assumed a mortgage of $135,750 attached to the building and land. The fair market value of the corporation’s stock received in the exchange was $413,500. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)

a. What amount of gain or loss does Callie realize on the transfer of the property to her corporation?

b. What amount of gain or loss does Callie recognize on the transfer of the property to her corporation?

c. What is Callie's basis in the stock she receives in her corporation?

      

Answer 1

Requirement (a) $413,500 Fair market value of stock received Add. Mortgage assumed by corporation Amount realized Less. Adjusted basis of property transferred Gain realized $135,750 $549,250 $493,000 $56,250 10 11 12 Requirement (b) No gain or loss is recognized on the transfer of the property because requirements of 9351 are satisfied & boot is not received in the exchange. - 14 15 16 17 Requirement(c) Total tax adjusted basis of $493,000 Assets transferred Less. Mortgage assumed | ($135,750) Tax basis in stock received 357250 18 19

KINDLY RATE!

ANY DOUBTS OR CORRECTIONS?

JUST LEAVE A COMMENT BELOW

THANK YOU