Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: FMV Adjusted Tax Basis Building $ 75,000 $ 20,000 Land 175,000 80,000 Total $ 250,000 $ 100,000 To equalize the exchange, Wiley Corporation paid Hermione $50,000 in addition to her stock. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: FMV Adjusted Tax Basis Building $ 75,000 $ 20,000 Land 175,000 80,000 Total $ 250,000 $ 100,000 To equalize the exchange, Wiley Corporation paid Hermione $50,000 in addition to her stock. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter12: Corporations: Organization, Capital Structure, And Operating Rules
Section: Chapter Questions
Problem 3BCRQ
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Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $200,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock:
| FMV | Adjusted Tax Basis | |
|---|---|---|
| Building | $ 75,000 | $ 20,000 |
| Land | 175,000 | 80,000 |
| Total | $ 250,000 | $ 100,000 |
To equalize the exchange, Wiley Corporation paid Hermione $50,000 in addition to her stock. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
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