I have answered this question and am looking to see if it is correct. Yvonne and Simon form Ion Corporation. Yvonne transfers equipment (basis of $110,000 and fair market value of $165,000). Simon invests $130,000 of cash. They each receive 100 shares in Ion Corporation, worth $130,000, but Yvonne also receives $35,000 of cash from Ion. Calculate Ion Corporation’s basis in the equipment. In addition, determine Yvonne and Simon’s basis in the Ion stock. Yvonne received cash, Ion Corporation subject to section 351 treatment. The gain which is recognized for Yvonne is the lower of the realized gain and the boot. The realized gain is $55,000 and the boot is $35,000 so the recognized gain for Yvonne is $35,000 Yvonne’s basis of stock is $110,000 Ion’s stock basis is $145,000 Simon’s stock basis is $130,000
I have answered this question and am looking to see if it is correct. Yvonne and Simon form Ion Corporation. Yvonne transfers equipment (basis of $110,000 and fair market value of $165,000). Simon invests $130,000 of cash. They each receive 100 shares in Ion Corporation, worth $130,000, but Yvonne also receives $35,000 of cash from Ion. Calculate Ion Corporation’s basis in the equipment. In addition, determine Yvonne and Simon’s basis in the Ion stock. Yvonne received cash, Ion Corporation subject to section 351 treatment. The gain which is recognized for Yvonne is the lower of the realized gain and the boot. The realized gain is $55,000 and the boot is $35,000 so the recognized gain for Yvonne is $35,000 Yvonne’s basis of stock is $110,000 Ion’s stock basis is $145,000 Simon’s stock basis is $130,000
Chapter7: Losses—deductions And Limitations
Section: Chapter Questions
Problem 84TA
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I have answered this question and am looking to see if it is correct.
- Yvonne and Simon form Ion Corporation. Yvonne transfers equipment (basis of $110,000 and fair market value of $165,000). Simon invests $130,000 of cash. They each receive 100 shares in Ion Corporation, worth $130,000, but Yvonne also receives $35,000 of cash from Ion. Calculate Ion Corporation’s basis in the equipment. In addition, determine Yvonne and Simon’s basis in the Ion stock.
Yvonne received cash, Ion Corporation subject to section 351 treatment.
The gain which is recognized for Yvonne is the lower of the realized gain and the boot. The realized gain is $55,000 and the boot is $35,000 so the recognized gain for Yvonne is $35,000
Yvonne’s basis of stock is $110,000
Ion’s stock basis is $145,000
Simon’s stock basis is $130,000
Expert Solution
Step 1
Step 1) Computation of realized gain
Realized gain = Fair market value of the stock received + boot received- basis in equipment
$55,000 = $130,000 + $35,000 - $110,000
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT