#5

Several years ago, your client, Brooks Robertson, started an office cleaning service. His business was very successful, owing much to his legacy as the greatest defensive third baseman in major league history and his nickname, "The Human Vacuum Cleaner." Brooks operated his business as a sole proprletorship and used the cash method of accounting. Brooks was advised by his attorney that it is too risky to operate his business as a sole proprletorship and that he should Incorporate to limit his llability. Brooks has come to you for advice on the tax Implications of Incorporation. His balance sheet Is presented below. Under the terms of the Incorporation, Brooks would transfer the assets to the corporation in return for 100 percent of the company's common stock. The corporation would also assume the company's llabilities (payables and mortgage). Complete this question by entering your answers in the tabs below. How much gain or loss (on a per-asset basis) does Brooks realize on the transfer of each asset to the corporation Note: Negative amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable. Complete this question by entering your answers in the tabs below. How much, if any, gain or loss (on a per-asset basis) does Brooks recognize? Note: Negative amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable. Complete this question by entering your answers in the tabs below. c. How much gain or loss, if any, must the corporation recognize on the receipt of the assets of the sole proprietorship in exchange for the corporation's stock? d. What tax basis does Brooks have in the corporation's stock? Note: For both requirements, negative amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable. Complete this question by entering your answers in the tabs below. What is the corporation's adjusted tax basis in each asset it receives from Brooks? Note: Negative amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable. Complete this question by entering your answers in the tabs below. How much, if any, gain or loss (on a per-asset basis) will Brooks recognize if he had taken back a 10-year note worth $25,000 plus stock worth $78,000 plus the liability assumption? Note: Negative amounts should be indicated by a minus sign. Leave no answers blank. Enter zero if applicable. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount