In 2020, Martin and Rebecca formed White Corporation. Martin transfers real estate with an adjusted basis of...

In 2020, Martin and Rebecca formed White Corporation. Martin transfers real estate with an adjusted basis of $260,000 and a fair market value of $350,000 to the newly formed White Corporation in exchange for 75% of the common stock of White Corporation. The real estate was encumbered by a mortgage of $275,000 which White Corporation assumed. Rebecca contributed equipment with a fair market value of $35,000 and an adjusted basis of $15,000 in exchange for 25% of the common stock and a $10,000 bond.

What is the amount of gain or loss realized and recognized by Martin on the transfer of the real estate?
What basis does Martin take in White Corporation stock?
What basis does White Corporation take in the real estate contributed by Martin?
What is the amount of gain or loss realized and recognized by Rebecca on the transfer of the equipment?
What basis does Rebecca take in White Corporation stock?
What basis does White Corporation take in the equipment contributed by Rebecca?

Expert Solution

a. Gain to Martin = Fair Market Value+Mortgage Liability-Adjusted basis

=$350000+$ 275000-$260000

=$365000

b.Martin takes 75% of the common stock of white corporation

c.White corporation takes $625000($350000+$275000) basis in real estate contributed by martin

d.Gauin to Rebecca = Fair market Value- Adjusted basis

=$35000-$15000

=$20000

e.Rebecca takes 25% of the common stock of white corporation

f.White corporation takes $35000 basis in contribution by Rebecca

ekkarill92 answered 10 months ago

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