Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 in return for 50 perc the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted 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 $ 114,375 266,875 $ 381,250 $ 30,500 122,000 $ 152,500 Building Land Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock. hat amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she r ain or loss realized ain or loss recognized
Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 in return for 50 perc the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted 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 $ 114,375 266,875 $ 381,250 $ 30,500 122,000 $ 152,500 Building Land Total To equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock. hat amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she r ain or loss realized ain or loss recognized
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 49P
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Transcribed Image Text:Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $305,000 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
$ 114,375
266,875
$ 30,500
122,000
$ 152,500
Building
Land
$ 381,250
Total
To equalize the exchange, Wizard Corporation paid Hermione $76,250 in addition to her stock.
c. 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
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