Francine 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 tax bases.
$\begin{array} { l r r r }
& \text { FMV } & \text { Tax Basis } \
\text { Inventory } & \$ 30,000 & \$ 10,000 \
\text { Buildirin } & 130,000 & 80,000 \
\text { Land } & \underline {50,000} & \underline {100,000} \
\text { Total } & \underline {\$ 210,000 }& \underline {\$ 190,000}
\end{array}$ The corporation also assumed a mortgage of $60,000 attached to the building and land.The fair market value of the corporation's stock received in the exchange was $150,000.
a.What amount of gain or loss does Francine realize on the transfer of the property to her corporation?
b.What amount of gain or loss does Francine recognize on the transfer of the property to her corporation?
c.What is Francine's basis in the stock she receives in her corporation?

Question

Francine 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 tax bases.
 $\begin{array} { l r r r } 
& \text { FMV } & \text { Tax Basis } \
\text { Inventory } & \$ 30,000 & \$ 10,000 \
\text { Buildirin } & 130,000 &  80,000 \
\text { Land } & \underline {50,000} & \underline {100,000} \
\text { Total } & \underline {\$ 210,000 }& \underline {\$ 190,000}
\end{array}$ The corporation also assumed a mortgage of $60,000 attached to the building and land.The fair market value of the corporation's stock received in the exchange was $150,000.
a.What amount of gain or loss does Francine realize on the transfer of the property to her corporation?
b.What amount of gain or loss does Francine recognize on the transfer of the property to her corporation?
c.What is Francine's basis in the stock she receives in her corporation?

Quizplus · Accepted Answer

The Answer of Francine 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 tax bases.
 $\begin{array} { l r r r } 
& \text { FMV } & \text { Tax Basis } \
\text { Inventory } & \$ 30,000 & \$ 10,000 \
\text { Buildirin } & 130,000 &  80,000 \
\text { Land } & \underline {50,000} & \underline {100,000} \
\text { Total } & \underline {\$ 210,000 }& \underline {\$ 190,000}
\end{array}$ The corporation also assumed a mortgage of $60,000 attached to the building and land.The fair market value of the corporation's stock received in the exchange was $150,000.
a.What amount of gain or loss does Francine realize on the transfer of the property to her corporation?
b.What amount of gain or loss does Francine recognize on the transfer of the property to her corporation?
c.What is Francine's basis in the stock she receives in her corporation?

Francine Incorporated Her Sole Proprietorship by Transferring Inventory,a Building,and Land