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C12-Chp-04-3C-Assets-given-for-stock

C12-Chp-04-3C-Assets-given-for-stock - exchange for the...

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138ecae03c0b00312aef5b42ee620da6ec5d34b0.xls Investing Assets in Exchange for Corporate Stock Charlotte Corporation Revised Book Value FMV Case A Case B Cash $10,000 $10,000 Other Assets 40,000 $90,000 Total Assets $50,000 $100,000 Debt $0 $0 Stock-100 shares at $100 par 10,000 Retained Earnings 40,000 Total Owner Equity $50,000 $100,000 Value per share $500 $1,000 Charlotte Corporation is wholly owned by Mr. Rich. Charlotte Corporation would like to expand into Monroe and Gastonia. Mr. Wu owns a building in Monroe and a building in Gastonia. Each building (with land) has a basis of $200,000 and FMV of $300,000. Each building was acquired by Mr. Wu on 1-1-2000. Case A. Invest one building. Charlotte Corporation will issue 300 new shares (worth $300,000) to Mr. Wu in exchange for the Monroe building on Jan. 1, 2007 (Is the a fair exchange? Does it make sense?) Please prepare a GAAP balance sheet after this transaction. Case B. Invest two buildings. (Rather than only one building.) Charlotte will issue 600 new shares (worth $600,000) to Mr. Wu in
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Unformatted text preview: exchange for the Monroe building and the Gastonia Building on Jan. 1, 2007. Please prepare a GAAP balance sheet after this transaction. Please answer the following questions Provide amounts and citations for supporting code and regulations where applicable. Provide your answer for the transaction described. Case A Case B 1. What is the amount of gain Amount or loss realized by Mr. Wu? Cite 2. What is the amount of gain Amount or loss recognized by Mr. Wu? Cite 3. What is the basis of the Amount stock received by Mr. Wu? Cite 4. When does holding period start Answer for stock received by Mr. Wu? Cite 5. What amount of gain or loss is Amount recognized by Charlotte Corp.? Cite 6. What is the basis of property Amount received by Charlotte Corp.? Cite Suggested Sources: § 61, 351, 1.351-1, 357( c), 1.357-1, 358, 1.358-1, 362, 1.362-1 (All) 1001, 1.1001-1, 1012, 1.1012-1, 1016, 1.1016-2, 1032, 1223(1) & (2)...
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