Question (Category: Business :Accounting )
Tax questions 39. (LO2)Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporationrsquos stock. The property transferred to the corporation had the following fair market values and tax-adjusted bases: FMV Tax- Adjusted Basis Inventory $ 20,000 $ 10,000 Building 150,000 100,000 Land 230,000 300,000 Total $400,000 $410,000The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporationrsquos stock received in the exchange was $300,000. The transaction met the requirements to be tax-deferred under sect351. Assume the fair market value of the building is now $250,000 and the fair market value of the land is $530,000. The fair market value of the stock remains $300,000.a. What amount of gain or loss does Zhangrealizeon the transfer of the property to her corporation?b. What amount of gain or loss does Zhangrecognizeon the transfer of the property to her corporation?c. What is Zhangrsquos tax basis in the stock she receives in the exchange?d. What is the corporationrsquos tax-adjusted basis in each of the assets received in the exchange? Assume the corporation assumed a mortgage of $500,000 attached to the building and land.e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?f. What is Zhangrsquos tax basis in the stock she receives in the exchange?g. What is the corporationrsquos tax-adjusted basis in each of the assets received in the exchange?
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