Problem 08-43 (LO 08-2) (Static) Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock Building Land Total FMV $ 75,000 175,000 $ 250,000 Adjusted Tax Basis $ 20,000 80,000 $100,000 To equalize the exchange, Wiley Corporation paid Hermione $50,000 in addition to her stock. Required: a. What amount of gain or loss does Ramona realize on the formation of the corporation? What amount, if any, does Ramona recognize? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. b. What is Ramona's tax basis in the stock received in return for the contribution of property to the corporation? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. c. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. d. What is Hermione's tax basis in the stock received in return for the contribution of property to the corporation? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. e. What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. f. Assume Hermione's adjusted tax basis in the land was $200,000. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
Problem 08-43 (LO 08-2) (Static) Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock Building Land Total FMV $ 75,000 175,000 $ 250,000 Adjusted Tax Basis $ 20,000 80,000 $100,000 To equalize the exchange, Wiley Corporation paid Hermione $50,000 in addition to her stock. Required: a. What amount of gain or loss does Ramona realize on the formation of the corporation? What amount, if any, does Ramona recognize? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. b. What is Ramona's tax basis in the stock received in return for the contribution of property to the corporation? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. c. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. d. What is Hermione's tax basis in the stock received in return for the contribution of property to the corporation? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. e. What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. f. Assume Hermione's adjusted tax basis in the land was $200,000. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
Chapter3: Organizing And Financing A New Venture
Section: Chapter Questions
Problem 2EP
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Problem 08-43 (LO 08-2) (Static)
Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $200,000 in return for 50 percent of the
corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for
50 percent of the corporation's stock:
Adjusted Tax
Basis
$ 20,000
80,000
$ 100,000
FMV
$ 75,000
175,000
$ 250,000
To equalize the exchange, Wiley Corporation paid Hermione $50,000 in addition to her stock.
Required:
a. What amount of gain or loss does Ramona realize on the formation of the corporation? What amount, if any, does Ramona
recognize?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
Building
Land
Total
b. What is Ramona's tax basis in the stock received in return for the contribution of property to the corporation?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
c. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
d. What is Hermione's tax basis in the stock received in return for the contribution of property to the corporation?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
e. What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
f. Assume Hermione's adjusted tax basis in the land was $200,000.
What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
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