Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to 100 percent of the corporation's stock. The property transferred to the corporation had the fo and adjusted tax bases: Adjusted Tax FMV Basis Inventory Building $ 56,000 420,000 $ 28,000 280,000 644,000 840,000 $ 1,148,000 Land Total $ 1,120,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. Th corporation's stock received in the exchange was $1,020,000. The transaction met the requir under §351. (Negative amount should be indicated by a minus sign. Leave no answer blanl
Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to 100 percent of the corporation's stock. The property transferred to the corporation had the fo and adjusted tax bases: Adjusted Tax FMV Basis Inventory Building $ 56,000 420,000 $ 28,000 280,000 644,000 840,000 $ 1,148,000 Land Total $ 1,120,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. Th corporation's stock received in the exchange was $1,020,000. The transaction met the requir under §351. (Negative amount should be indicated by a minus sign. Leave no answer blanl
Chapter18: Corporations: Organization And Capital Structure
Section: Chapter Questions
Problem 30P
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Transcribed Image Text:Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for
100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values
and adjusted tax bases:
Adjusted Tax
FMV
Basis
$ 56,000
420,000
$ 28,000
280,000
840,000
$ 1,148,000
Inventory
Building
644,000
$ 1,120,000
Land
Total
The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the
corporation's stock received in the exchange was $1,020,000. The transaction met the requirements to be tax-deferred
under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
Assume the corporation assumed a mortgage of $1,220,000 attached to the building and land. Assume the fair market value of the
building is now $700,000 and the fair market value of the land is $1,484,000. The fair market value of the stock remains $1,020,000.
e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?
Gain or loss recognized
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