In the current year, Dan, Jay, and Erin form Zeus Corporation. Dan contributes land (a capital asset) having a $75,000 FMV (fair market value) in exchange for 85 shares of Zeus stock. He purchased the land three years ago for $100,000. Jay contributes machinery (Sec. 1231 property purchased four years ago) having a $115,000 adjusted basis and a $45,000 FMV in exchange for 75 shares of Zeus stock. Erin contributes services worth $30,000 in exchange for 10 shares of Zeus stock. A. What is the amount of Dan's recognized gain or loss? b.What is Dan's basis in his Zeus shares? When does his holding period begin? c.What is the amount of Jay's recognized gain or loss? d. What is Jay's basis in his Zeus shares? When does his holding period begin? e.How much income, if any, does Erin recognize? f.What is Erin's basis in her Zeus shares? When does her holding period begin? g. What is Zeus's basis in the land and the machinery? When does its holding period begin? How doesZeus treat the amount paid to Erin for her services?
In the current year, Dan, Jay, and Erin form Zeus Corporation. Dan contributes land (a capital asset) having a $75,000 FMV (fair market value) in exchange for 85 shares of Zeus stock. He purchased the land three years ago for $100,000. Jay contributes machinery (Sec. 1231 property purchased four years ago) having a $115,000 adjusted basis and a $45,000 FMV in exchange for 75 shares of Zeus stock. Erin contributes services worth $30,000 in exchange for 10 shares of Zeus stock. A. What is the amount of Dan's recognized gain or loss? b.What is Dan's basis in his Zeus shares? When does his holding period begin? c.What is the amount of Jay's recognized gain or loss? d. What is Jay's basis in his Zeus shares? When does his holding period begin? e.How much income, if any, does Erin recognize? f.What is Erin's basis in her Zeus shares? When does her holding period begin? g. What is Zeus's basis in the land and the machinery? When does its holding period begin? How doesZeus treat the amount paid to Erin for her services?
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 64IIP
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In the current year, Dan, Jay, and Erin form Zeus Corporation. Dan contributes land (a capital asset) having a $75,000 FMV (fair market value) in exchange for 85 shares of Zeus stock. He purchased the land three years ago for $100,000. Jay contributes machinery (Sec. 1231 property purchased four years ago) having a $115,000 adjusted basis and a $45,000 FMV in exchange for 75 shares of Zeus stock. Erin contributes services worth $30,000 in exchange for 10 shares of Zeus stock.
A. What is the amount of Dan's recognized gain or loss?
b.What is Dan's basis in his Zeus shares? When does his holding period begin?
c.What is the amount of Jay's recognized gain or loss?
d. What is Jay's basis in his Zeus shares? When does his holding period begin?
e.How much income, if any, does Erin recognize?
f.What is Erin's basis in her Zeus shares? When does her holding period begin?
g. What is Zeus's basis in the land and the machinery? When does its holding period begin? How doesZeus treat the amount paid to Erin for her services?
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Step 1: A. Amount of Dan's recognized gain or loss
VIEWStep 2: B. Dan's basis in his Zeus shares and his holding period begin
VIEWStep 3: C. Amount of Jay's recognized gain or loss
VIEWStep 4: D. Jay's basis in his Zeus shares and his holding period begin
VIEWStep 5: E. Income, if any, does Erin recognize
VIEWStep 6: F. Erin's basis in her Zeus shares and her holding period begin
VIEWStep 7: G. Zeus's basis in the land and the machinery, its holding period begin and amount paid to Erin
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT