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 proprietorship 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 proprietorship and that he should incorporate to limit his liability 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 companys common stock The corporation would also assume the companys liabilities payables and mortgage Balance Sheet Adjusted tax basis FMV Assets Accounts receivable 0 24000 Cleaning equipment net 44000 39000 Building 88000 94000 Land 44000 69000 Total assets 176000 226000 Liabilities Accounts payable 0 29000 Salaries payable 0 24000 Mortgage on land and building 54000 54000 Total liabilities 54000 107000 Required Answer the following questions a How much gain or loss on a perasset basis does Brooks realize on the transfer of each asset to the corporation b How much if any gain or loss on a perasset basis does Brooks recognize 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 corporations stock d What tax basis does Brooks have in the corporations stock e What is the corporations adjusted tax basis in each asset it receives from Brooks f How much if any gain or loss on a perasset basis will Brooks recognize if he had taken back a 10year note worth 25000 plus stock worth 94000 plus the liability assumption g Will Brooks be able to transfer the accounts receivable to the corporation and have the corporation recognize the income when the receivable is collected h Brooks was depreciating the equipment 200 percent declining balance and building straightline using MACRS when it was held inside the proprietorship How will the corporation depreciate the equipment and building Assume Brooks owned the equipment for four years sevenyear property and the building for six years i1 Will the corporation be able to deduct the liabilities when paid i2 In consideration of whether it can deduct liabilities when paid will it matter which accounting method cash or accrual the corporation uses