Your client is a dermatologist. She conducts her practice as a sole proprietor. She uses the cash method of accounting. She was advised to incorporate. She seeks your advice as to whether there are any tax consequences if she incorporates.

She reported the following to you:

Assets and Liabilities to be Transferred Tax Basis Fair Market Value

Cash in Banks $ 4,500 $ 4,500

Patent 20,000 21,500

Furniture & Fixtures 50,000 10,000

Medical Equipment 110,000 75,000

Computer System 45,000 20,000

Building & Land 133,000 350,000

Patient Receivables -0- 110,000

Total $362,500 $591,000

First Mortgage Building $ 295,000 $295,000

Notes Payable Medical Equipment 70,000 70,000

Capital/Equity ( 2,500) 226,000

Total Debt and Capital/Equity $362,500 $591,000

She will transfer all assets and liabilities to her new corporation. She was advised that the new corporation can issue the following to her in the exchange:

(1) 10 shares of newly-issued stock in her new corporation.

(2) A one-year 4% promissory note for $1,000.

(3) $3,000 in cash.

1. Compute transferors realized gain or loss (if any).

2. Compute transferors recognized gain or loss (if any).

3. Calculate transferors adjusted basis in the new corporations stock.

Your client is a dermatologist. She conducts her practice as a sole proprietor. She uses the cash method of accounting. She was advised to incorporate. She seeks your advice as to whether there are any tax consequences if she incorporates. She reported the following to you: Assets and Liabilities to be Transferred Tax Basis Fair Market Value Cash in Banks $ 4.500 $ 4.500 Patent 20,000 21,500 Furniture & Fixtures 50,000 10,000 Medical Equipment 110,000 75,000 Computer System 45,000 20,000 Building & Land 133.000 350,000 Patient Receivables 110,000 $362,500 $591,000 $ 295,000 $295.000 First Mortgage - Building Notes Payable - Medical Equipment 70,000 70,000 Capital/Equity (2.500) 226.000 Total Debt and Capital/Equity $362,500 $591,000 She will transfer all assets and liabilities to her new corporation. She was advised that the new corporation can issue the following to her in the exchange: (1) 10 shares of newly-issued stock in her new corporation. (2) (3) A one-year 4% promissory note for $1,000. $3,000 in cash. A. Compute transferor's realized gain or loss (if any). B. Compute transferor's recognized gain or loss (if any). C. Calculate transferor's adjusted basis in the new corporation's stock. Your client is a dermatologist. She conducts her practice as a sole proprietor. She uses the cash method of accounting. She was advised to incorporate. She seeks your advice as to whether there are any tax consequences if she incorporates. She reported the following to you: Assets and Liabilities to be Transferred Tax Basis Fair Market Value Cash in Banks $ 4.500 $ 4.500 Patent 20,000 21,500 Furniture & Fixtures 50,000 10,000 Medical Equipment 110,000 75,000 Computer System 45,000 20,000 Building & Land 133.000 350,000 Patient Receivables 110,000 $362,500 $591,000 $ 295,000 $295.000 First Mortgage - Building Notes Payable - Medical Equipment 70,000 70,000 Capital/Equity (2.500) 226.000 Total Debt and Capital/Equity $362,500 $591,000 She will transfer all assets and liabilities to her new corporation. She was advised that the new corporation can issue the following to her in the exchange: (1) 10 shares of newly-issued stock in her new corporation. (2) (3) A one-year 4% promissory note for $1,000. $3,000 in cash. A. Compute transferor's realized gain or loss (if any). B. Compute transferor's recognized gain or loss (if any). C. Calculate transferor's adjusted basis in the new corporation's stock