What adjusted basis does Wizard Corporation take

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Reference no: EM133010230

Question - Ron and Hermione formed Wizard Corporation on January 2. Ron contributed cash of $180,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted bases in return for 50 percent of the corporation's stock:

FMV Tax-Adjusted Basis

Building $96,000 $24,000

Land 144,000 96,000

Total $240,000 $120,000

To equalize the exchange, Wizard Corporation paid Hermione $60,000 in addition to her stock.

Assume Hermione's adjusted basis in the land was $240,000.

Required - What adjusted basis does Wizard Corporation take in the land and building received from Hermione?

Reference no: EM133010230

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