AC553_W4_Solution14_54

AC553_W4_Solution14_54 - Problem 14-54 Solution Transfers...

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1 Problem 14-54 Solution Transfers for Stock Mr. Hogan decided to incorporate his printing business and to give his manager, Mr. Temple, a share in the business. Mr. Hogan’s sole proprietorship transferred the following: Basis Value Accounts payable . ........................... $0 ……. .$3,000 Accounts receivable . ......................... 0 ………5,000 Printing press . .................................. 4,000….…. . 6,000 Truck . ............................................. 12,300……. .. 8,000 Cash . ................................................ 2,000….…. . 2,000 Mr. Hogan received 70 shares of the stock, worth $14,000, in Express-Press Inc. Mr. Temple invested $2,000 in cash and received the remaining 30 shares of the stock. What are the tax consequences to Mr. Hogan, Mr. Temple, and Express-Press Inc.? Solution: A valid Code Sec. 351 transaction has occurred for Mr. Hogan and Mr. Temple. Since neither party received boot and the liabilities are not a problem (i.e., no Code Sec.
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This note was uploaded on 02/21/2012 for the course ACCOUNTING 553 taught by Professor James during the Spring '12 term at DeVry Phoenix.

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