Mike, Mary, Moe, and Melinda are knowledgeable about construction. They have decided to pool their knowledge...

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Mike, Mary, Moe, and Melinda are knowledgeable about construction. They have decided to pool their knowledge and resources to form Design Builds Inc., a C corporation. They will provide custom construction services to area businesses and homeowners. All participants expect to work full time for Design Builds, and each expects to contribute sufficient assets to become a 25% shareholder with a total stock equity of $100,000 each. The assets contributed by each shareholder, along with any related liabilities assumed by the corporation, are provided in the exhibit. For the shareholders Mike in Design Builds Inc., determine the gain realized, gain recognized, and tax basis of the shares. Enter the amount for each item in the associated cells in the table below. If a response is zero, enter a zero (0). Shareholder Mike Mary Moe Melinda Realized Gain Boot Received Shareholder Contributions to Designs Builds Inc. FMV of noncash property contributed 120,000 130,000 100,000 170,000 Recognized Gain Tax Basis in Shares Corp. Basis in Property Liability assumed by corporation 0 80,000 0 40,000 Basis in noncash property contributed 100,000 50,000 20,000 50,000 Mike Cash contributed 0 50,000 0 0 Cash paid to shareholder by corporation 20,000 0 0 30,000 Mike, Mary, Moe, and Melinda are knowledgeable about construction. They have decided to pool their knowledge and resources to form Design Builds Inc., a C corporation. They will provide custom construction services to area businesses and homeowners. All participants expect to work full time for Design Builds, and each expects to contribute sufficient assets to become a 25% shareholder with a total stock equity of $100,000 each. The assets contributed by each shareholder, along with any related liabilities assumed by the corporation, are provided in the exhibit. For the shareholders Mike in Design Builds Inc., determine the gain realized, gain recognized, and tax basis of the shares. Enter the amount for each item in the associated cells in the table below. If a response is zero, enter a zero (0). Shareholder Mike Mary Moe Melinda Realized Gain Boot Received Shareholder Contributions to Designs Builds Inc. FMV of noncash property contributed 120,000 130,000 100,000 170,000 Recognized Gain Tax Basis in Shares Corp. Basis in Property Liability assumed by corporation 0 80,000 0 40,000 Basis in noncash property contributed 100,000 50,000 20,000 50,000 Mike Cash contributed 0 50,000 0 0 Cash paid to shareholder by corporation 20,000 0 0 30,000

Answer rating: 100% (QA)

MIKE Realized Gain 2000... View the full answer