Calculate gain that will be recognized by the shareholders

Reference no: EM132845411

Question - Calculate gain (loss) that will be recognized by the shareholders as a whole and the shareholders' collective basis in the stock after the transfer using the information below:

1. Emmitt and Troy formed a corporation to which Emmitt transferred a patent right that had a FMV of $25,000 and a zero adjusted basis. Troy transferred equipment with a $100,000 FMV and an adjusted basis to him of $75,000. In return, Emmitt received 25% and Troy 75% of all of the corporation's outstanding stock.

2. Violet incorporated her sole proprietorship in 2020. She transferred equipment with a $125,000 basis and $300,000 FMV, and the corporation assumed an $80,000 loan held against the equipment. The loan was taken out 1 day before the transfer, 3 years after the equipment was purchased, because Violet knew it would provide a tax benefit.

Reference no: EM132845411

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