What is Stizzle taxable income in Year

Reference no: EM132687018

Question - John and Abby formed Stizzle Corporation on January 1 of Year 1. On that date, John contributed a capital asset with a fair value of $50k and an adjusted basis of of $28k, which John owned for 5 yrs, andCapital Asset with a FMV of $50k and an adj basis of $55k, which John had owned for two months, to Stizzle Corporation in exchange for 90 shares of Stizzle stock and $10k cash; and Abby contributed stock in Hally Corporation (reprsenting 1% ownership in Hally) with a FMV of $70k, and an adjusted basis of $25k and managerial services (all performed in Year 1) worth $20K, also in exchange for 90 shares of Stizzle stock.

Additionally during Yr 1:

- Stizzle received $43k of revenue from operations

- Stizzle received $5k dividend from Hally

- Stizzle properly took $8k of deprecation of Capital Asset

Additionally during Yr 2:

- Stizzle receievd $20k of revenue from operations

- Stizzle received $5k divided from Hally

- Stizzle sold the Capital Asset for $52K

-Stizzle distributed $5k cash to John and $5k cash to Abby

Required -

1. What is Stizzle taxable income in Year 1 and Year 2?

2. What income, gain/loss would Abby recognize if Abby sold all her shares to Z for $60,000?

3. What income, gain/losss, does John recognzie from the transfer on Jan 1 of Yr 1?

Reference no: EM132687018

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