a What are the tax consequences to Allie and to Broadbill Corporation The land

A what are the tax consequences to allie and to

This preview shows page 4 - 6 out of 7 pages.

a.What are the tax consequences to Allie and to Broadbill Corporation?
Image of page 4
35. Rafael transfers the following assets to Crane Corporation in exchange for all of its stock. (Assume that neither Rafael nor Crane plans to make any special tax elections at the time of incorporation.) Assets Rafael’s Adjusted Basis Fair Market Value Inventory $60,000 $100,000 Equipment 150,000 105,000 Shelving 80,000 65,000 a. What is Rafael’s recognized gain or loss? Realized Loss = AB of Rafael – FMV of Assets for Rafael ($60,000 + $150,000 + $80,000) – ($100,000 + $105,000 + $65,000) = $20,000 Realized Loss Recognized Loss = $0 b. What is Rafael’s basis in the stock? Rafael’s Basis in Stock = AB of Rafael in Assets $60,000 + $150,000 + $80,000 = $290,000 = Rafael’s Basis in Stock c. What is Crane’s basis in the inventory, equipment, and shelving? Crane’s Basis in Inventory = $60,000 Crane’s Basis in Equipment = $135,000 Crane’s Basis in Shelving = $75,000 d. If Rafael has no intentions of selling his Crane stock for at least 15 years, what action would you recommend that Rafael and Crane Corporation consider? How does this change the previous answers? Crane is to take a carryover basis in the assets received. Crane’s basis is $60,000 for inventory, $150,000 for equipment and $80,000 for shelving 36. Alice and Jane form Osprey Corporation. Alice transfers property, basis of $25,000 and value of $200,000, for 50 shares in Osprey Corporation. Jane transfers property, basis of $50,000 and value of $165,000, and agrees to serve as manager of Osprey for one year; in return, Jane receives 50 shares in Osprey. The value of Jane’s services to Osprey is $35,000.
Image of page 5
Image of page 6

You've reached the end of your free preview.

Want to read all 7 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture