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Susan Kim contributed a piece of land to Sycamore Company for a 15 percent stake in...

Susan Kim contributed a piece of land to Sycamore Company for a 15 percent stake in the firm 10 years ago. Her tax basis in the land was $200,000. When the land was transferred to Sycamore, its fair market value was $350,000. If Sycamore is an LLC, how much gain should she recognize? If Sycamore is an S corporation, how much gain should she recognize?  

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Answer #1

solution:

Capital Gain = Fair Market value - The Cost Of Asset

The capital gain that susan has to recognise is

=$350,000-$200,000

=$150,000

For Sycamore company no loss or gain to be recognised and land to be valued at its fair market value.

=

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