Zhang 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 adjusted bases: FMV Adjusted Basis 60,000 $ 30,000 Inventory Building Land Total 450,000 690,000 $1,200,000 300,000 900,000 $1,230,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,100,000. The transaction met the requirements to be tax-deferred under $351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000. e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts? Gain or loss recognized
Zhang 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 adjusted bases: FMV Adjusted Basis 60,000 $ 30,000 Inventory Building Land Total 450,000 690,000 $1,200,000 300,000 900,000 $1,230,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,100,000. The transaction met the requirements to be tax-deferred under $351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000. e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts? Gain or loss recognized
Chapter12: Nonrecognition Transactions
Section: Chapter Questions
Problem 21P
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Transcribed Image Text:Zhang 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 adjusted bases:
FMV
Adjusted
Basis
60,000 $ 30,000
Inventory
Building
Land
Total
450,000
690,000
$1,200,000
300,000
900,000
$1,230,000
The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the
corporation's stock received in the exchange was $1,100,000. The transaction met the requirements to be tax-deferred
under $351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
Assume the corporation assumed a mortgage of $1,300,000 attached to the building and land. Assume the fair market value of the
building is now $750,000 and the fair market value of the land is $1,590,000. The fair market value of the stock remains $1,100,000.
e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?
Gain or loss recognized
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