Barbara DeMarco CPA
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 45P
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Transcribed Image Text:Barbara DeMarco, CPA operates a lucrative
return preparation business as a sole
proprietorship focusing on all types of
individuals and businesses. Her friend
Roberta Heckleman, CPA operates as a sole
proprietorship too. Barbara and Roberta
decide to merge their businesses and operate
under the name DeMarco and Hecklleman,
CPAS as a partnership. Barbara contributes
her client list with an FMV of $80,000 and a
basis of $80,000 and her land with an FMV of
$250,000 and a basis of $75,000. There are no
liabilities associated with the land. Roberta
contributes her tax law library with an FMV of
$75,000 and a basis of $95,000 and $255,000
cash. How much gain must DeMarco and
Heckleman, CPAs recognize on the transfer of
these assets from Barbara and Roberta?
(a)$0
(b)$10,000
(c) $170,000
(d)$255,000
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