Business, 17.03.2020 03:21 grey00

Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation’s stock. Hermione contributed a building and land with the following fair market values and adjusted bases in return for 50 percent of the corporation’s stock:

FMV Tax adjusted Basis
Building $75,000 $20,000
Land 175,000 80,000
Total $250,000 $100,000

To equalize the exchange, Wizard Corporation paid Hermione $50,000 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?
b. What is Ron's tax basis in the stock he receives in return for his contribution of property to the corporation?
c. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
d. What is Hermione's tax basis in the stock she receives in return for her contribution of property to the corporation?
e. What tax-adjusted basis does Wizard Corporation take in the land and building received from Hermione?
Assume Hermione's tax-adjusted basis in the land was $200,000.
f. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
g. What tax-adjusted basis does Wizard Corporation take in the land and building received from Hermione? Assume Hermione's tax-adjusted basis in the land was $250,000.
h. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
i. What tax-adjusted basis does Wizard Corporation take in the land and building received from Hermione?
j. What election can Hermione and Wizard Corporation make to allow Wizard Corporation to take a carryover basis in the land?

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 21:00

Case in point 2.4 attaway airlines, part two back at attaway airlines, the morning meeting ended with no agreement between dan esposito and molly kinnon. in fact, a new issue arose. molly now says that the new accounting system is entitled to the highest priority because the federal government soon will require the reporting of certain types of company-paid health insurance premiums. because the current system will not handle this report, she insists that the entire accounting system is a nondiscretionary project. as you might expect, dan is upset. can part of a project be nondiscretionary? what issues need to be discussed? the committee meets again tomorrow, and the members will look to you, as the it director, for guidance.

Answers: 1

Answer

Business, 22.06.2019 02:30

The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.

Answers: 2

Answer

Business, 22.06.2019 07:00

Imagine you own an established startup with growing profits. you are looking for funding to greatly expand company operations. what method of financing would be best for you?

Answers: 2

Answer

Business, 22.06.2019 10:40

You were able to purchase two tickets to an upcoming concert for $100 apiece when the concert was first announced three months ago. recently, you saw that stubhub was listing similar seats for $225 apiece. what does it cost you to attend the concert?

Answers: 1

Answer

You know the right answer?

Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return...

Questions