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 bases: FMV Adjusted Basis
Inventory $ 52,000 $ 26,000
Building 390,000 260,000
Land 598,000 780,000
Total $ 1,040,000 $ 1,066,000
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 $940,000. The transaction met the requirements to be tax-deferred under §351. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
c. What is Zhang’s tax basis in the stock she receives in the exchange?
Tax basis:
Assume the corporation assumed a mortgage of $1,140,000 attached to the building and land. Assume the fair market value of the building is now $650,000 and the fair market value of the land is $1,378,000. The fair market value of the stock remains $940,000.
e. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?
Gain or loss recognized:
Assume the corporation assumed a mortgage of $1,140,000 attached to the building and land. Assume the fair market value of the building is now $650,000 and the fair market value of the land is $1,378,000. The fair market value of the stock remains $940,000.
f. What is Zhang’s tax basis in the stock she receives in the exchange?
Assume the corporation assumed a mortgage of $1,140,000 attached to the building and land. Assume the fair market value of the building is now $650,000 and the fair market value of the land is $1,378,000. The fair market value of the stock remains $940,000.
g. What is the corporation’s adjusted basis in each of the assets received in the exchange? (Do not round intermediate calculations.)
Inventory Building Land
Adjusted basis