Zhang 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 tax bases. Inventory Building Land Total FMV $ 56,000 420,000 644,000 $ 1,120,000 Adjusted Tax Basis $ 28,000 280,000 840,000 $ 1,148,000 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 $1,020,000. Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Problem 19-40 Part a (Algo) a. What amount of gain or loss does Zhang realize on the transfer of the property to the corporation?
Zhang 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 tax bases. Inventory Building Land Total FMV $ 56,000 420,000 644,000 $ 1,120,000 Adjusted Tax Basis $ 28,000 280,000 840,000 $ 1,148,000 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 $1,020,000. Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Problem 19-40 Part a (Algo) a. What amount of gain or loss does Zhang realize on the transfer of the property to the corporation?
Chapter17: Property Transactions: §1231 And Recapture Provisions
Section: Chapter Questions
Problem 48P
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Transcribed Image Text:Zhang 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 tax bases
Inventory
Building
Land
Total
FMV
$ 56,000
420,000
644,000
$ 1,120,000
Adjusted Tax
Basis
$ 28,000
280,000
840,000
$ 1,148,000
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 $1,020,000.
Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.
Problem 19-40 Part a (Algo)
a. What amount of gain or loss does Zhang realize on the transfer of the property to the corporation?
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