Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for100 percent of the corporation's stock. The property transferred to the corporation had the following fair market valuesand adjusted tax bases:InventoryBuildingLandTotalFMV$ 20,000150,000230,000$ 400,000The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of thecorporation's stock received in the exchange was $300,000.Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.Adjusted TaxBasis$ 10,000100,000300,000$ 410,000g. Suppose the corporation assumed a mortgage of $500,000 attached to the building and land. The fair market value of the buildingis $250,000 and the fair market value of the land is $530,000. The fair market value of the stock remains $300,000.AdjustedbasisWhat is the corporation's adjusted tax basis in each of the assets received in the exchange?Note: Do not round intermediate calculations.Inventory$ 12,250Answer is not complete.BuildingLand

Adjusted tax basis refers to the modified value of an asset for tax purposes after accounting for…

Answered: g. Suppose the corporation assumed a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [The following information applies to the questions displayed below.] What book-tax differences in year 1 and year 2 associated with its capital gains and losses would DEF Inc. report in the following alternative scenarios? Identify each book-tax difference as favorable or unfavorable and as permanent or temporary. a. In year 1, DEF recognized a loss of $15,000 on land that it had held for investment. In year 1, it also recognized a $30,000 gain on equipment it had purchased a few years ago. The equipment sold for $50,000 and had an adjusted basis of $20,000. DEF had deducted $40,000 of depreciation on the equipment. In year 2, DEF recognized a capital loss of $2,000. Year 1 Year 2 Book-tax Difference Favorable or Temporary or Unfavorable Permanent
KNB sold real property to Firm P for $15,000 cash and Firm P’s assumption of the$85,000 mortgage on the property.Required: What is KNB’s amount realized on the sale?b. Compute KNB’s after-tax cash flow from the sale if its adjusted basis in the realproperty is $40,000 and its marginal tax rate is 35 percent.
The ABC company bought land 2 years ago for $20,000. The FMV, now is $24,000 the corporation still owes $15,000 on this purchase. The company makes a non liquidating distribution of this property to a stockholder who accepted the debt. What is the tax effect to the shareholder of receiving this distribution? A. This is no tax effect to an owner who receives a nonliquidating distribution B. Shareholder must recognize income of $9000 C. Shareholder must recognize income of $20,000 D. Shareholder must recognize income of $24,000
[The following information applies to the questions displayed below] What book-tax differences in year 1 and year 2 associated with its capital gains and losses would ABD Incorporated report in the following alternative scenarios? Identify each book-tax difference as favorable or unfavorable and as permanent or temporary. Note: Leave no answer blank. Enter zero if applicable and select "Not applicable" if no effect. f. Answer for year 7 only. Capital gains Capital losses Year 1 $ 0 10,000 Years 2 Year 7 $ 0 0 $ 15,000 0 Book-tax Difference Favorable or Unfavorable Year 7 Temporary or Permanent
Assume there is no mortgage on the land, market value is $200 and the basis of the land is $60. The corporation borrows $5 from a bank and gives the $5 to W along with 1009% of the stock in exchange for the land. B.) What is the amount realized? What are the components of the amount realized?
Aside from the 50,000 monthly rental for leased premises, X paid ABC Corporation (lessor) 5,000 representing the agreed share of X in the payment of the real property tax on the leased property. How much is the reportable gross income of ABC for taxation purposes? 5,000 50,000 55,000 None of the above
Assume there is no mortgage on the land, market value is $200 and the basis of the land is S60. The corporation borrows $5 from a bank and gives the $5 to W along with 100% of the stock in exchange for the land. A.) What is the fair market value of the stock? (Think of the balance sheet, what are the assets and the liabilities?)
Given the following details, what is the difference in seller net proceeds between the asset sale and the stock sale alternatives (after-tax)? Details ($ in millions): Corporate income tax rate: 30% Capital gains rate: 20% Stock Sale: Purchase price: $4,000 Stock basis: $1,500 Asset Sale: Purchase price: $4,000 Asset basis: $1,500 A. $1,750 B. $600 C. $1,400 D. $2,000
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Credits are more valuable than deductions to a corporation because O only 50% of all deductions may be subtracted. deductions only apply to interest received on a municipal bond. O deductions are subtracted from income tax expense. credits are subtracted after the income tax expense has been computed. O credits are more valuable because they are the expenses of operating a business.
Your employer asks you to consult on the better approach to a decision. What should the corporation pay for an asset that will return them $150,000 at the end of year 1, then zero in year 2, then $400,000 in years 3 & 4, then zero in year 5, then $200,000 in years 6-10, assuming their discount rate is 3% (ignoring taxes) ?
Determine the amount of taxable income and separately stated items in each of the cases below. Assuming the corporation is a Subchapter S corporation. Ignore any carryforward items. Required: a. Corporate financial statement: net income of $52,750 including tax expense of $15,300, charitable contributions of $3,000, and depreciation expense of $37,450. Depreciation expense for tax purposes is $46,480. b. Corporate financial statement: net income of $140,200 including tax expense of $68,450, charitable contributions of $28,000, depreciation expense of $103,750, and meals expenses of $31,300. Depreciation expense for tax purposes is $145,900. c. Corporate financial statement: net income of $227,350 including tax expense of $111,540, charitable contributions of $16,000, municipal bond interest of $19,390, meals expenses of $41,900, capital gains of $6,150, and depreciation expense of $143,050. Depreciation expense for tax purposes is $131,750, and the corporation has a $7,105 charitable…

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