Question

In: Accounting

Leona transferred a building (Adjusted Basis of $200,000 and Fair Market Value of $30,000) to Riggins...

Leona transferred a building (Adjusted Basis of $200,000 and Fair Market Value of $30,000) to Riggins Corporation. In return, Leona received eighty percent (80%) of Riggins Corporation’s stock (Fair Market Value $5000). There was an outstanding mortgage of $225,000 on the building which Riggins Corporation assumed. Which of the following is correct?

  1. Leona will have a Recognized Gain on the transfer of $25,000
  2. Leona will have no Recognized Gain or Recognized Loss on the transfer
  3. Riggins Corporation will have a basis in the building transferred by Leona of $200,000
  4. Leona will have a Recognized Loss on the transfer of $170,000

Solutions

Expert Solution

Here commonstock value is not given.on the basis of question

Answer:

$25000

Explanation:

Calculation for Leona’s recognized gain

First step is to calculate the Consideration amount received by Leona

Consideration received by Leona=225000

Second step is less the adjusted basis to the Consideration received by Leona’s in order to know the gain

Consideration received by Leona’s =225000

Less Adjusted basis =200000

Gain =25000

Therefore Leona’s recognized gain is $25000


Related Solutions

1_Elwood Emerson transferred a building having a fair market value of $200,000 and an adjusted basis of...
1_Elwood Emerson transferred a building having a fair market value of $200,000 and an adjusted basis of $1215,000 to his controlled corporation. In return Elwood received common stock worth $80,000, a 10-year debenture worth $20,000, a two-year note worth $10,000, $5,000 cash and the corporation assumed the mortgage of $85,000 on the building.  a. How much gain is realized by Elwood? b. How much (and what type) gain is recognized by Elwood? c. What is the corporation's basis for the building? d. What is Elwood's basis for...
Macedona Corporation distributes Land (Adjusted Basis of $60,000 and Fair Market Value of $120,000) as a...
Macedona Corporation distributes Land (Adjusted Basis of $60,000 and Fair Market Value of $120,000) as a Property Dividend to its shareholders. The Land is subject to a liability of $160,000. As a result of this distribution, Macedona Corporation must Recognized Gain of: $0 $100,000 $60,000 $40,000
1. Bee owns land (Bravo) with an adjusted basis of $60 and a fair market value...
1. Bee owns land (Bravo) with an adjusted basis of $60 and a fair market value of $100. Bravo is subject to a mortgage of $4. B sells the land to Dell who gives Bee $96 in cash and assumes the mortgage. a)Does Bee realize gain/loss on the transaction and if yes, how much? b)Does Bee recognize gain/loss on the transaction and if yes, how much? 2. Assume there is no mortgage and Bee swaps Bravo to Dell for land...
Martin transfers real estate with an adjusted basis of $260000 and fair market value of $350000...
Martin transfers real estate with an adjusted basis of $260000 and fair market value of $350000 to newly formed White Corporation in exchange for 75% of the common stock of White Corporation. The real estate was encumbered by a mortgage of $275000 which White Corporation assumed. As part of the same organization, Rebecaca contribute equipment with a fair market value of $35000 and an adjusted basis of $15000 in exchange for 25% of the common stock and $10000 bond. a)...
Rose company owns Machine A (adjusted basis of $12,000 and fair market value of $15,000), which...
Rose company owns Machine A (adjusted basis of $12,000 and fair market value of $15,000), which it uses in its business. Rose sells Machine A for $15,000 to Aubry (a dealer) and then purchases Machine B for $15,000 from Joan(also a dealer). Machine B would normally qualify as like-kind property. a. What are Rose Company's realized and recognized gain on the sale of Machine A? b. What is Rose's basis for Machine B? c. What factors would motivate Rose to...
7. Zelda owns a building. Zelda’s basis in the building is $300,000 and the fair market...
7. Zelda owns a building. Zelda’s basis in the building is $300,000 and the fair market value is $1,000,000. There is a mortgage on the building of $250,000. Homer owns a building worth $750,000 and his basis is $800,000. Zelda and Homer exchange buildings and Homer assumes Zelda’s mortgage. How much gain or loss will each of them recognize on the transaction? What will their basis be in the property they receive
In 2020 Ryce contributes nondepreciable property with an adjusted basis of $143,400 and a fair market...
In 2020 Ryce contributes nondepreciable property with an adjusted basis of $143,400 and a fair market value of $215,100 to the Montgomery Partnership in exchange for a one-half interest in profits and capital. In the next tax year, when the property's fair market value is $229,440, the partnership distributes the property to Jarvis, the other one-half partner. Jarvis's basis in the partnership interest was $229,440 immediately before the distribution. Which partner must recognize the built-in gain, what is the amount...
Kessel Company purchased a building and land with a fair market value of $550,000 (building, $350,000...
Kessel Company purchased a building and land with a fair market value of $550,000 (building, $350,000 and​ land, $200,000​) on January​ 1, 2018. Kessel signed a 20​-year, 6​% mortgage payable. Kessel will make monthly payments of $3,940.37. Round to two decimal places. Explanations are not required for journal entries. Requirements Journalize the mortgage payable issuance on January​ 1, 2018. Prepare an amortization schedule for the first two payments Journalize the first payment on January​ 31, 2018. Journalize the second payment...
As sole heir, Dazie receives all of Mary's property (adjusted basis of $10,400,000 and fair market...
As sole heir, Dazie receives all of Mary's property (adjusted basis of $10,400,000 and fair market value of $13,820,000). Six months after Mary's death in 2018, the fair market value is $13,835,000. a. Assuming an estate return is filed, can the executor of Mary's estate elect the alternate valuation date and amount? b. Dazie's basis for the property is $. ___________ c. Assume instead that the fair market value six months after Mary's death is $13,800,000. Assuming an estate return...
In 2017, Adrianna contributed land with a basis of $16,000 and a fair market value of...
In 2017, Adrianna contributed land with a basis of $16,000 and a fair market value of $25,000 to the A&I Partnership in exchange for a 25% interest in capital and profits. In 2020, the partnership distributes this property to Isabel, also a 25% partner, in a current distribution. The fair market value had increased to $30,000 at the time the property was distributed. Isabel's and Adrianna's bases in their partnership interests were each $40,000 at the time of the distribution....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT