Problem
Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $255,000 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: FMV Adjusted Tax Basis Building $ 95,625 $ 25,500 Land 223,125 102,000 Total $ 318,750 $ 127,500 To equalize the exchange, Wiley Corporation paid Hermione $63,750 in addition to her stock.
Task
1. What amount of gain or loss does Ramona realize on the formation of the corporation? What amount, if any, does Ramona recognize?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
2. What is Ramona's tax basis in the stock received in return for the contribution of property to the corporation?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
3. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
4. What is Hermione's What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.Assume Hermione's adjusted tax basis in the land was $255,000.
5. What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize? Assume Hermione's adjusted tax basis in the land was $255,000.
6. What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. Assume Hermione's adjusted tax basis in the land was $318,750.
7. What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione?
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.Assume Hermione's adjusted tax basis in the land was $318,750.
8. What election can Hermione and Wiley Corporation make to allow Wiley Corporation to take a carryover basis in the land?