Martin operates a law practice as a sole proprietorship using the cash method of accounting.Martin incorporates the law practice and transfers the following items to a new,solely owned corporation. Martin must recognize a gain of ________ and has a stock basis of ________:

Question

Martin operates a law practice as a sole proprietorship using the cash method of accounting.Martin incorporates the law practice and transfers the following items to a new,solely owned corporation.  Martin must recognize a gain of ________ and has a stock basis of ________:

Quizplus · Accepted Answer

B)The accounts payable are not considered liabilities under Sec.357(c)since the payment of the payables gives rise to a deduction.Stock basis equals: cash basis $10,000 plus equipment basis $80,000,less liability transferred $50,000 = $40,000.

Martin Operates a Law Practice as a Sole Proprietorship Using