What amount of gain or loss does Hermione realize

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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.

Required - What amount of gain or loss does Hermione realize on the formation of the corporation? What amount, if any, does she recognize?

Reference no: EM133005724

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