Rick transferred the following assets and liabilities to Warbler Corporation. Adjusted Basis Fair Market Value Building $210,000 $225,000 Equipment 45,000 75,000 Trucks 15,000 30,000 Mortgage (held for four years) on building 30,000 30,000 In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000). a.Rick's basis in the stock of Warbler Corporation is $270,000. b.Rick has a recognized gain of $75,000. c.Rick has a recognized gain of $60,000. d.Warbler Corporation has the same basis in the assets received as Rick does in the stock.
Rick transferred the following assets and liabilities to Warbler Corporation. Adjusted Basis Fair Market Value Building $210,000 $225,000 Equipment 45,000 75,000 Trucks 15,000 30,000 Mortgage (held for four years) on building 30,000 30,000 In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000). a.Rick's basis in the stock of Warbler Corporation is $270,000. b.Rick has a recognized gain of $75,000. c.Rick has a recognized gain of $60,000. d.Warbler Corporation has the same basis in the assets received as Rick does in the stock.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 16CE
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Rick transferred the following assets and liabilities to Warbler Corporation.
In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000).
| Adjusted Basis | Fair Market Value | |
| Building | $210,000 | $225,000 |
| Equipment | 45,000 | 75,000 |
| Trucks | 15,000 | 30,000 |
| Mortgage (held for four years) on building | 30,000 | 30,000 |
In return, Rick received $75,000 in cash plus 90% of Warbler Corporation's only class of stock outstanding (fair market value of $225,000).
a.Rick's basis in the stock of Warbler Corporation is $270,000.
b.Rick has a recognized gain of $75,000.
c.Rick has a recognized gain of $60,000.
d.Warbler Corporation has the same basis in the assets received as Rick does in the stock.
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