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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Breslin Incorporated made a capital contribution of investment property to its 100-percent-owned subsidiary, Crisler Company. The investment property had a fair market value of $3,000,000 and a tax basis to Breslin of $2,225,000.
b. What is the tax basis of the investment property to Crisler Company after the contribution to capital?
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- An S-Corporation has ownership of a piece of land with an adjusted basis of $10,000 and a FMV of $100,000. It distributes this land to a shareholder, what basis would the shareholder have in this land? a. $0 b. It would depend on the shareholder's inside basis c. $90,000 d. $100,000 e. $10,000arrow_forwardThe ABC company bought land 2 years ago for $20,000. The FMV, now is $24,000 the corporation still owes $15,000 on this purchase. The company makes a non liquidating distribution of this property to a stockholder who accepted the debt. What is the tax effect to the shareholder of receiving this distribution? A. This is no tax effect to an owner who receives a nonliquidating distribution B. Shareholder must recognize income of $9000 C. Shareholder must recognize income of $20,000 D. Shareholder must recognize income of $24,000arrow_forwardPrepare a calculation of taxable income for the following scenarios: S corporation owned by Henry, Iris, and Jasmine Wrigley Juice has the following income, expense, and loss items for the current year: Sales $850,000 Tax-exempt interest 40,000 Long-term capital gain 85,000 Short-term capital loss 35,000 Passive activity loss 20,000 Cost of goods sold 480,000 Depreciation 40,000 Section 179 expense 50,000 Other operating expenses 200,000 Net operating loss (from preceding year) 24,000arrow_forward
- Company A purchased company B for $50,000,000. Company B had net assets of $30,000,000, therefore $20,000,000 was paid in excess of the fair value of the net assets. What does this $20,000,000 premium paid by company A represent? In other words, what is this called?arrow_forwardIn some commercial property operating agreements, investors are scheduled to receive their “pro rata” share of all cash flow distributions. Based on your understanding of what is meant by a “pro rata” distribution, an investor that contributed 1/10 of the required equity investment would be entitled to receive what proportion of all future cash flows?arrow_forwardZhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted bases: Inventory Building Land Total FMV 88,000 660,000 1,012,000 $1,760,000 $ Adjusted Basis 44,000 440,000 1,320,000 $1,804,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $1,660,000. The transaction met the requirements to be tax-deferred under §351. (Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)arrow_forward
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