Sam, Paul, Carlos and Jai form Pinochle Corporation by contributing the following assets to Pinochle: # of Shares Other Prop. Rec' by S/H Basis to Fair Market Transferor Value Issued Sam contributes: Inventory $30,000 $96,000 30 $6,000 Cash Paul contributes: $45,000 Paul had taken $30,000 of depreciation in prior years Equipment $99,000 30 $9,000 Cash Carlos Secret Formula $15,000 $90,000 30 Jai Cash $30,000 $30,000 10 a. What is Sam's recognized gain related to this transaction? b. What is Seth's basis in his Pinochle stock? c. What is Pinochle's basis in the inventory? d. What Is Paul's recognized gain or loss? e. Is Paul's' gain or loss capital or ordinary? f. What is Paul's basis in his Pinochle stock? g. What is Pinochle's basis in the equipment? h. What is Carlos' recognized gain on the transaction? i. What is Pinochle's basis in the secret formula? j. What is Jai's recognized gain or loss? k. What is Jai's basis in his Pinochle stock?

Sam, Paul, Carlos and Jai form Pinochle Corporation by contributing the following assets to Pinochle: # of Shares Other Prop. Rec' by S/H Basis to Fair Market Transferor Value Issued Sam contributes: Inventory $30,000 $96,000 30 $6,000 Cash Paul contributes: $45,000 Paul had taken $30,000 of depreciation in prior years Equipment $99,000 30 $9,000 Cash Carlos Secret Formula $15,000 $90,000 30 Jai Cash $30,000 $30,000 10 a. What is Sam's recognized gain related to this transaction? b. What is Seth's basis in his Pinochle stock? c. What is Pinochle's basis in the inventory? d. What Is Paul's recognized gain or loss? e. Is Paul's' gain or loss capital or ordinary? f. What is Paul's basis in his Pinochle stock? g. What is Pinochle's basis in the equipment? h. What is Carlos' recognized gain on the transaction? i. What is Pinochle's basis in the secret formula? j. What is Jai's recognized gain or loss? k. What is Jai's basis in his Pinochle stock?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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