Describe tax issues while transferring property

Reference no: EM139717

Describe Tax issues while transferring property from proprietorship business to a corporation.

Two years ago Jorge transferred property he had used in his sole proprietorship to Flycatcher Corporation, a newly formed corporation, for 50 shares of Flycatcher stock. The property had an adjusted basis of $300,000 and a fair market value of $800,000. Six months later Jorge's friend, Polly, transferred property she had used in her sole proprietorship to Flycatcher Corporation for 50 shares of Flycatcher stock and cash of $100,000. Her property had an adjusted basis of $150,000 and a value of $900,000. Both Jorge and Polly serve on Flycatcher's board of directors. In addition, Polly has a contract with Flycatcher to perform consulting services for the corporation. In the current year, Flycatcher Corporation redeems all of Polly's Flycatcher stock for property with a probable value of $1.4 million. What are the tax issues for Polly and Flycatcher?

Reference no: EM139717

Questions Cloud

Identifying accounting concepts : The role and process of recognising depreciation in accounting reports, and by identifying accounting concepts which provide the justification for recognising depreciation.

Sexual dimorphisms of the mammalian brain : Describe and discuss sexual dimorphisms of the mammalian brain. How do they develop?

Preparing a list of pros and cons : Preparing a list of pros and cons do not mean just giving a definition of three entities. Your information presented should be structured toward their prospective business. Please make sure your responsive comprise the necessary references and rule..

Evaluate the variable utility cost per unit : Evaluate revenue must K-Henry's generate in order to reach the break-even point and the variable utility cost per unit, to the nearest cent

Describe tax issues while transferring property : Describe Tax issues while transferring property from proprietorship business to a corporation and What are the tax issues for Polly and Flycatcher

Distinctive smell of chlorine : As you enter the locker room at gym, you observe the distinctive smell of chlorine from the adjacent swimming pool.

Case study on mis farm bank : The Bank Farm is an old bench and solid. Located in a regional marketing center is the bank active in all phases of banks specializing in agricultural loans. President of the Bank, Frank Swain, 62, has. With the bank for many years and is prominent i..

Compute the depreciation expense : Survival Industries, Inc. purchased a boat at a cost of $360,000-Compute the depreciation expense for 2014

Employing a strategy for solving problems : Jonas was employing a strategy for resolving problems while doing his homework. He thought as he was resolving the first problem

User Account

All Pages