When incorporating Spotfree, a cleaning company, Jayne transferred accounts receivable (fair market value $20,000 and $0 tax basis) and $12,000 of accounts payable from her cash method sole proprietorship to Spotfree in exchange for Spotfree stock valued at $8,000 Assume the transfer qualifies unde...

a 0 gain recognized Because Jayne did not receive boot in the exchange an ...

When incorporating Spotfree, a cleaning company, Jayne transferred accounts receivable (fair market value $20,000 and $0 tax

Question:

When incorporating Spotfree, a cleaning company, Jayne transferred (fair market value $20,000 and $0 tax basis) and $12,000 of from her cash-method sole proprietorship to Spotfree in exchange for Spotfree stock valued at $8,000. Assume the transfer qualifies under §351.
a. What is the amount and character of the gain Jayne must recognize on the exchange?
b. What is Jayne's basis in the Spotfree stock she received in the exchange?
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...