Individuals Adam and Bonnie form an S corporation,with Adam contributing cash of $100,000 for a 50% interest,and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.
a.Determine Bonnie's initial basis in her stock,assuming that she receives a 50% interest.
b.
The S corporation sells the property for $120,000.Determine Adam's and Bonnie's stock basis after the sale.
c.Determine Adam's and Bonnie's gain or loss if the company is liquidated.

Question

Individuals Adam and Bonnie form an S corporation,with Adam contributing cash of $100,000 for a 50% interest,and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.
a.Determine Bonnie's initial basis in her stock,assuming that she receives a 50% interest.
b.​
The S corporation sells the property for $120,000.Determine Adam's and Bonnie's stock basis after the sale.
c.Determine Adam's and Bonnie's gain or loss if the company is liquidated.

Quizplus · Accepted Answer

The Answer of Individuals Adam and Bonnie form an S corporation,with Adam contributing cash of $100,000 for a 50% interest,and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.
a.Determine Bonnie's initial basis in her stock,assuming that she receives a 50% interest.
b.​
The S corporation sells the property for $120,000.Determine Adam's and Bonnie's stock basis after the sale.
c.Determine Adam's and Bonnie's gain or loss if the company is liquidated.

Individuals Adam and Bonnie Form an S Corporation,with Adam Contributing