interaction_of_sec_357_solution - Interaction of Sec....

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Interaction of Sec. 357(b) and Sec. 357(c) SOULTION Maddy forms BlueMoon Corporation by transferring land with a basis of $125,000 (fair value $775,000). The land is subject to a mortgage of $375,000. One month prior to incorporating BlueMoon, Maddy borrows $100,000 for personal purposes and gives the lender a second mortgage on the land. BlueMoon issues stock worth $300,000 to Maddy and assumes both mortgages on the land. Required : (a) What are the tax consequences to Maddy and BlueMoon Corporation? (b) How would the tax consequences differ if she had not borrowed the $100,000? Solution: Part (a) Fair value 775,000 Adjusted basis (125,000) Realized gain 650,000 Mortgage 1 375,000 Mortgage
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This note was uploaded on 08/29/2010 for the course TAX 5015 taught by Professor Kelliher,c during the Summer '08 term at University of Central Florida.

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interaction_of_sec_357_solution - Interaction of Sec....

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