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C12-Chp-04-1D-Class-Plan-Solutions-2011-0208

# C12-Chp-04-1D-Class-Plan-Solutions-2011-0208 - Chapter...

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44f4952597e19552819e7df518cdcba736a6bcc4.xls Page 1 of 4 No. H-W Txt Sec. Sub 1 Cost \$1,000,000 1011 Ted claimed depreciation of \$600,000 on the building. Acc. Deprec. (\$600,000) 1012 Ted's building#1 has an adjusted basis of \$400,000. Basis 400,000 1016 a 2 Fair Marked Value (FMV) of building is \$640,000. FMV 640,000 Amount of debt on Ted's building. None 0 167 a 167 a 2a Ted sells Building#1 for cash of \$640,000, Ted's recognized gain? 1001 2b He trades Bldg#1 for IBM stock with FMV of \$640,000? His recog. gain? 2, 4 4-5 1001 What is control? Etc.? Sec. 351 Sec. 368( c) Sec. 1031(a)(2)? 5 2c He trades bldg#1 for similar bldg worth \$640,000? His recognized gain? 4-3 1031 2d 4-3 1031 b 3a See 1. Basic Info. Above. Investment in a new ENTITY (corp. or partnership). 4-5 Ted will invest building#1 (above) in a new entity and become a 50% owner. Another individual (Beth) will invest cash \$640,000 and become a 50% owner. Corp. Code Partnership Code Ted's Gain Realized 1001(a) Not App. 1.1001-2(4)(iv) Ted's Gain recognized 351(a) 721 4-3 Ted's Basis in business 358(a)(1) 722 4-11 Entity's Gain recognized 1032 721 Entity's Basis in buidling 362(a)(1) 723 412 3b If Ted sells his corporate stock for its FMV of \$640,000, his recognized gain? 4-5 1001 If corportion sells building#1 for \$640,000, Corporation's recognized gain? 1001 This is a double counting of the gain. Congress likes double counting of gains. More tax! 3c IF BUILDING#1 HAD FMV OF \$100,000, Ted HAD a realized (but unrecognized) loss 351 of \$300,000. If he sells his corp. stock for \$100,000, his capital loss amount? However, corportion only takes a basis in building#1 of its lower FMV of? 4-13 362 e 3d See Example 3a Above. Suppose the other individual (Beth) invests \$620,000 cash and 4-5 provides legal services worth \$20,000, associated with organizing the business. What is the amount of gain recognized by the other individual (Beth)? 4-7 351 b Note: Sec. 351 can apply to a new or old corp. Stockholders may be individuals, corporations, partnerships, etc. Basic Info. Ted bought factory building (Building #1).

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C12-Chp-04-1D-Class-Plan-Solutions-2011-0208 - Chapter...

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