Required information [The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Building Land Total FMV $ 75,000 175,000 $ 250,000 Adjusted Tax Basis $ 20,000 80,000 $ 100,000 To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. Gain or loss realized Gain or loss recognized a. What amount of gain or loss does Ron realize on the formation of the corporation? What amount, if any, does he recognize?
Required information [The following information applies to the questions displayed below.] Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) Building Land Total FMV $ 75,000 175,000 $ 250,000 Adjusted Tax Basis $ 20,000 80,000 $ 100,000 To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock. Gain or loss realized Gain or loss recognized a. What amount of gain or loss does Ron realize on the formation of the corporation? What amount, if any, does he recognize?
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 54P
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Required information
[The following information applies to the questions displayed below.]
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of
the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax
bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative
amount should be indicated by a minus sign.)
Building
Land
Total
FMV
$ 75,000
175,000
$ 250,000
Adjusted Tax
Basis
$ 20,000
80,000
$ 100,000
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
Gain or loss realized
Gain or loss recognized
a. What amount of gain or loss does Ron realize on the formation of the corporation? What amount, if any, does he recognize?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87f377c8-556b-40c3-ad73-583aac17d9d0%2F8b629ec2-928e-49c8-9a09-1b8fa8d5613a%2F7rrncgg_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $200,000 in return for 50 percent of
the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax
bases in return for 50 percent of the corporation's stock: (Leave no answer blank. Enter zero if applicable. Negative
amount should be indicated by a minus sign.)
Building
Land
Total
FMV
$ 75,000
175,000
$ 250,000
Adjusted Tax
Basis
$ 20,000
80,000
$ 100,000
To equalize the exchange, Wizard Corporation paid Hermione $50,000 in addition to her stock.
Gain or loss realized
Gain or loss recognized
a. What amount of gain or loss does Ron realize on the formation of the corporation? What amount, if any, does he recognize?
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