Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000,...
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Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000, for 50 Shares in Crow Corporation. Mary transfers property, basis of $80,000 and value of $1,480,000, and agrees to serve as manager of Crow for one year; in return Mary receives 50 shares of Crow. The value of Mary's services is S120,000. With respect to the transfers: a. Mary will not recognize gain or income. b. Earl will recognize a gain of $1,400,000. c. Crow Corporation has a basis of $1,480,000 in the property it received from Mary. d. Crow will have a business deduction of $120,000 for the value of the services Mary will render. e. None of these. Earl and Mary form Crow Corporation. Earl transfers property, basis of $200,000 and value of $1,600,000, for 50 Shares in Crow Corporation. Mary transfers property, basis of $80,000 and value of $1,480,000, and agrees to serve as manager of Crow for one year; in return Mary receives 50 shares of Crow. The value of Mary's services is S120,000. With respect to the transfers: a. Mary will not recognize gain or income. b. Earl will recognize a gain of $1,400,000. c. Crow Corporation has a basis of $1,480,000 in the property it received from Mary. d. Crow will have a business deduction of $120,000 for the value of the services Mary will render. e. None of these.
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The correct option is D The crow will have a business deducti... View the full answer
Related Book For
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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