Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $205,000 in return...

   

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Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $205,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: Building Land Total FMV $ 76,875 179,375 $ 256,250 Adjusted Tax Basis $ 20,500 82,000 $ 102,500 To equalize the exchange, Wizard Corporation paid Hermione $51,250 in addition to her stock. c. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Gain or loss realized Gain or loss recognized $ $ d. What is Hermione's tax basis in the stock she receives in return for her contribution of property to the corporation? Tax basis $ e. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione? Adjusted tax basis $ 69 Land $ Building Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $205,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: Building Land Total FMV $ 76,875 179,375 $ 256,250 Adjusted Tax Basis $ 20,500 82,000 $ 102,500 To equalize the exchange, Wizard Corporation paid Hermione $51,250 in addition to her stock. c. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Gain or loss realized Gain or loss recognized $ $ d. What is Hermione's tax basis in the stock she receives in return for her contribution of property to the corporation? Tax basis $ e. What adjusted tax basis does Wizard Corporation take in the land and building received from Hermione? Adjusted tax basis $ 69 Land $ Building

Answer rating: 100% (QA)

B In this scenario Ron and Hermione formed Wizard Corporation and each of them contributed assets in exchange for 50 percent of the corporations stock To equalize the exchange Wizard Corporation paid ... View the full answer