Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreemer will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax ba inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to th corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Neg amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) hat amount of income gain or loss does Sam realize on the formation of the corporation? What amount, if any, doe come, gain, or loss realized come, gain, or loss recognized
Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreemer will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax ba inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to th corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Neg amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.) hat amount of income gain or loss does Sam realize on the formation of the corporation? What amount, if any, doe come, gain, or loss realized come, gain, or loss recognized
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 30P
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Transcribed Image Text:Sam and Devon agree to go into business together selling college-licensed clothing. According to the agreement, Sam
will contribute inventory valued at $146,000 in return for 80 percent of the stock in the corporation. Sam's tax basis in the
inventory is $79,000. Devon will receive 20 percent of the stock in return for providing accounting services to the
corporation (these qualify as organizational expenditures). The accounting services are valued at $36,500. (Negative
amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
a. What amount of income gain or loss does Sam realize on the formation of the corporation? What amount, if any, does he recognize?
Income, gain, or loss realized
Income, gain, or loss recognized
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