ACCT 730 Week 2 Problem Set Solutions

ACCT 730 Week 2 Problem Set Solutions - ACCT 730 Week 2...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ACCT 730 – Week 2 Problem Set Solutions Chapter 4: 26. a. $6,000 ordinary gain. b. $30,000 [$30,000 (basis of inventory) + $6,000 (gain recognized) – $6,000 (boot received)]. c. $36,000 [$30,000 (basis of inventory) + $6,000 (gain recognized)]. d. Carl recognizes gain of $9,000 (the amount of cash received). The gain is ordinary income because of the § 1245 depreciation recapture provisions. e. Carl has a basis of $45,000 in the Pine Corporation stock, computed as follows: $45,000 (basis in the equipment) + $9,000 (gain recognized) – $9,000 (boot received). f. Pine Corporation has a basis of $54,000 in the equipment, computed as follows: $45,000 (basis of the equipment to Carl) + $9,000 (gain recognized by Carl). g. Lucy has no recognized gain or loss. A secret process is property for purposes of § 351. h. Lucy has a basis of $15,000 in the Pine Corporation stock. i. Pine Corporation has a basis of $15,000 in the secret process. j. Sylvia has no gain or loss on the transfer. k. Sylvia has a basis of $30,000 in the Pine Corporation stock. pp. 4-3 to 4-12 and Figures 4.1 and 4.2 27. a. $0. b. $190,000. c. $140,000. d. $0. e. $285,000. f. $125,000 (basis in the equipment) and $10,000 (basis in the patent). g. The answers would not change. There is no requirement that the transferors receive the same type of stock. Further, both common stock and most preferred stock qualify as ‘‘stock.” However, if Gail received “nonqualified preferred stock,” her realized gain would be recognized because this type of preferred stock is treated as boot.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
h. The answers would not change. There is no requirement that the transferors be individuals. Example 2 and Figures 4.1 and 4.2
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

ACCT 730 Week 2 Problem Set Solutions - ACCT 730 Week 2...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online