Neil Gonzales, ACCT 420-V3WW, Assignment 2-1 Final

Neil Gonzales, ACCT 420-V3WW, Assignment 2-1 Final - Neil...

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Neil Gonzales Assignment 2-1 Chapter 18 Assessment Problems 30 points Due: May 8 Purpose To assess your ability to: analyze the consequences of assuming liability for a corporation determine what basis issues arise for shareholders and corporations describe the impact of shareholder debt and losses L 3 Traits Action Items 1. Complete problems 25, 26, 29, 33, 35 and 38 in Chapter 18 of West Federal Taxation . Chapter 18: 25. Mark and Gail form Maple Corporation with the following consideration: _____________________________________________________________________________ ___________________ Consideration Transferred Basis to FMV Number of Transferor Shares Issued _____________________________________________________________________________ ____________________ From Mark--- Cash $50,000 $50,000 Installment obligation 140,000 250,000 30 From Gail---
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Cash 150,000 150,000 Equipment 125,000 250,000 Patent 10,000 300,000 70 _____________________________________________________________________________ ___________________ The installment obligation has a face amount of $250,000 and was acquired last year from the sale of land held for investment purposes (adjusted basis of $140,000). As to these transactions, provide the following information: a. Mark’s recognized gain or loss. a. For this situation, Mark would have no recognized gain or loss . b. Mark’s basis in the Maple Corporation stock. b. $190,000 * * $190,000 [$250,000 (FMV) - $60,000] c. Maple Corporation’s basis in the installment obligation. c. $140,000 * * $140,000 (installment obligation). d. Gail’s recognized gain or loss. d. Gail has no recognized gain or loss. e. Gail’s basis in the maple Corporation stock. e. $285,000 * * $285,000 [$150,000 (cash) + $125,000 (equipment) + $10,000 (patent)]. f. Maple Corporation’s basis in the equipment and the patent. f. $125,000 basis for the equipment. $10,000 basis for the patent. g. How would your answers to the preceding questions change if Mark received common stock and Gail received preferred stock?
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g. There would be no difference in the answer if Mark received common stock and if Gail received preferred stock. h. How would your answers change if Gail was a partnership? h. The answers would not change if Gail was a partnership. 26. Jane, Jon, and Clyde incorporate their respective businesses and form Starling Corporation. On March 1 of the current year, Jane exchanges her property (basis of $50,000 and value of $150,000) for 150 shares in Starling Corporation. On April 15, Jon exchanges his property (basis of $70,000 and value of $500,000) for 500 shares in Starling. On May 10, Clyde transfers his property (basis of $90,000 and value of $350,000) for 3520 shares in Starling. a. If the three exchanges are part of a prearranged plan, what gain will each of the parties
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Neil Gonzales, ACCT 420-V3WW, Assignment 2-1 Final - Neil...

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