C12-Chp-07-8-Corp-Split-off-Bubba - Split-off Page 1 of 1...

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Split-off 221b5a50dcb5a3484369a3fc80bf8b50e35e0d7e.xls Page 1 of 1 Code No. Corporate Split-off Local Corp. (2 Stores) Raleigh Store-50% Book Value F.M.V. Book Value F.M.V. Current Assets $2,000,000 $2,000,000 $1,000,000 $1,000,000 Fixed Assets Original Cost 3,800,000 1,900,000 Accumulated Depreciation (800,000) (400,000) Net 3,000,000 6,000,000 1,500,000 3,000,000 Total Assets $5,000,000 $8,000,000 2,500,000 $4,000,000 Common Stock $1,000,000 500,000 Retained Earnings 4,000,000 2,000,000 Total Equity $5,000,000 $8,000,000 $2,500,000 $4,000,000 John's original Basis in Stock $1,000,000 John Smith now owns 50% of the stock of Local Corp. and his son Bubba owns the other 50%. [John originally invested $1,000,000 to start Local Corp. Recently, John gave one-half of his stock to Bubba. No gift tax was paid by John on the gift.] Local Corp owns two identical retail stores, one in Charlotte, the other in Raleigh. Bubba runs the Raleigh store and John runs the Charlotte Store.
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