Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $260,000 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.) Adjusted Tax Basis $ 26,000 104,000 $ 130,000 FMV $ 97,500 227,500 $ 325,000 Building Land Total To equalize the exchange, Wizard Corporation paid Hermione $65,000 in addition to her stock. Assume Hermione's adjusted tax basis in the land was $325,000. h. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Gain or loss realized Gain or loss recognized Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $260,000 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.) Adjusted Tax Basis FMV Building Land $ 97,500 227,500 $ 325,000 $ 26,000 104,000 $ 130,000 Total To equalize the exchange, Wizard Corporation paid Hermione $65,000 in addition to her stock. Assume Hermione's adjusted tax basis in the land was $325,000. i. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione? Land Building Adjusted tax basis
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $260,000 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.) Adjusted Tax Basis $ 26,000 104,000 $ 130,000 FMV $ 97,500 227,500 $ 325,000 Building Land Total To equalize the exchange, Wizard Corporation paid Hermione $65,000 in addition to her stock. Assume Hermione's adjusted tax basis in the land was $325,000. h. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Gain or loss realized Gain or loss recognized Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $260,000 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.) Adjusted Tax Basis FMV Building Land $ 97,500 227,500 $ 325,000 $ 26,000 104,000 $ 130,000 Total To equalize the exchange, Wizard Corporation paid Hermione $65,000 in addition to her stock. Assume Hermione's adjusted tax basis in the land was $325,000. i. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione? Land Building Adjusted tax basis
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 30P
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I need answer h and i
Transcribed Image Text:Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $260,000 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.)
Adjusted Tax
Basis
$ 26,000
104,000
FMV
$ 97,500
227,500
$ 325,000
Building
Land
$ 130,000
Total
To equalize the exchange, Wizard Corporation paid Hermione $65,000 in addition to her stock.
Assume Hermione's adjusted tax basis in the land was $325,000.
h. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does
she recognize?
Gain or loss realized
Gain or loss recognized
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $260,000 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.)
Adjusted Tax
FMV
Basis
Building
Land
$ 97,500
227,500
$ 325,000
$ 26,000
104,000
$ 130,000
Total
To equalize the exchange, Wizard Corporation paid Hermione $65,000 in addition to her stock.
Assume Hermione's adjusted tax basis in the land was $325,000.
i. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione?
Land
Building
Adjusted tax basis
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