(SOLVED) Anne and Michael own and operate a successful

mattress business
Anne and Michael own and operate a successful mattress business. They have decided to take
the business public. They contribute all the assets of the business to newly formed Spring
Corporation each in exchange for 20% of the stock. The remaining 60% is issued to an
underwriting company that will […]

Six years ago, Donna purchased land as an investment. The land cost $150,000 and is now
worth $480,000. Donna plans to transfer the land to Development Corporation, which will
subdivide it and sell individual tracts. Development’s income on the land sales will be ordinary
in character. a. What are the […]

Lois, who is single, transfers property with an $80,000 basis and a $120,000 FMV to Water
Corporation in exchange for all 100 shares of Water stock. The shares qualify as Sec. 1244
stock. Two years later, Lois sells the shares for $28,000. a. What are the amount and character
of […]

The City of Omaha donates land worth $500,000 to Ace Corporation to induce it to locate in
Omaha and create an estimated 2,000 jobs for its citizens. a. How much income, if any, must
Ace report on the land contribution? b. What basis does Ace take in the land? c. […]

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On January 10, 2015, Mary transfers to Green Corporation a machine purchased on March 3,
2012, for $100,000. On the transfer date, the machine has a $60,000 adjusted basis and a
$110,000 FMV. Mary receives all 100 shares of Green stock, worth $100,000, and a two-year
Green note worth $10,000. […]

Jerry transfers to Emerald Corporation property having a $32,000 adjusted basis and a $50,000
FMV in exchange for all of Emerald’s stock worth $15,000 and Emerald’s assumption of a
$35,000 mortgage on the property. a. What is the amount of Jerry’s recognized gain or loss? b.
What is Jerry’s basis […]

Jim owns 80% of Gold Corporation stock. He transfers a business automobile to Gold in
exchange for additional Gold stock worth $5,000 and Gold’s assumption of both his $1,000
automobile debt and his $2,000 education loan. The automobile originally cost Jim $12,000 and,
on the transfer date, has a $4,500 […]

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