The following facts are given regarding a sole proprietor transferring the assets of his business to a new corporation: Balance Sheet Adj. Basis FMV Cash Accounts Receivable Less: Allowance for Bad Debts Building Less: Accum. Depreciation $50,000 50,000 (5,000) 575,000 (50,000) 50,000 200,000 Accounts Payable Mortgage Payable Based upon the above information: 1. Prepare a beginning Balance Sheet for the new corporation. 2. What is the shareholder's basis in the stock received? $50,000 50,000 (5,000) 600,000 50,000 200,000 3. What is the shareholder's basis in the stock received if the Mortgage Payable is $600,000? 4. What is the value of the Assets in the Balance Sheet in #3? (Construct a new balance sheet if necessary.)
The following facts are given regarding a sole proprietor transferring the assets of his business to a new corporation: Balance Sheet Adj. Basis FMV Cash Accounts Receivable Less: Allowance for Bad Debts Building Less: Accum. Depreciation $50,000 50,000 (5,000) 575,000 (50,000) 50,000 200,000 Accounts Payable Mortgage Payable Based upon the above information: 1. Prepare a beginning Balance Sheet for the new corporation. 2. What is the shareholder's basis in the stock received? $50,000 50,000 (5,000) 600,000 50,000 200,000 3. What is the shareholder's basis in the stock received if the Mortgage Payable is $600,000? 4. What is the value of the Assets in the Balance Sheet in #3? (Construct a new balance sheet if necessary.)
Chapter22: S Corporations
Section: Chapter Questions
Problem 12DQ
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Transcribed Image Text:The following facts are given regarding a sole proprietor transferring the assets of his business to a new corporation:
Balance Sheet Adj. Basis
FMV
Cash
Accounts Receivable
Less: Allowance for Bad Debts
Building
Less: Accum. Depreciation
Accounts Payable
Mortgage Payable
Based upon the above information:
1. Prepare a beginning Balance Sheet for the new corporation.
2. What is the shareholder's basis in the stock received?
$50,000
50,000
(5,000)
575,000
(50,000)
50,000
200,000
$50,000
50,000
(5,000)
600,000
50,000
200,000
3. What is the shareholder's basis in the stock received if the Mortgage Payable is $600,000?
4. What is the value of the Assets in the Balance Sheet in #3? (Construct a new balance sheet if necessary.)
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