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Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Btroadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land.a. What are the tax consequences to Allie and to Broadbill Corporation?b. How would the tax consequences to Allie differ if she had not borrowed the $100,000?Red Corporation wants to set up a manufacturing facility in a Midwestern state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of $3 million) and cash of $1 million.a. How much gain or income, if any, must Red Corporation recognize?b. What basis will Red Corporation have in the land?c. Within one year of the contribution, Red constructs a building for $800,000 and purchases inventory for $200,000. What basis will Red Corporation have in each of those assets?
Frank, Cora, and Mitch are equal shareholders in Purple Corporation. The corporation's assets have a tax basis of $50,000 and a fair market value of $600,000. In the current year, Frank and Cora each loan Purple Corporation $150,000. The notes to Frank and Cora bear interest of 8% per annummitch leases equipment to Purple Corporation for an annual rental of $12,000. Discuss whether the shareholder loans from Frank and Cora might be reclassified as equity. Consider in your discussion whether Purple Corporation has an acceptable debt-equity ratio.
1) A sales discount correctly taken by the charge customer was debited to Sales at the time the entry was recorded. This error will cause. A) the net income for the period to be un
Question 1 What is accounting and book keeping? Explain the objectives of accounting? Question 2 Explain GAAP and write down the relationship between accounting principles, a
Brushy Mountain Mining Company's ore reserves are being depleted, so its sales are declining. Also, its pit is getting deeper every year, so its costs are rising. As a result, the
For a capital lease the lessee records the lease payments as rent expense, but for an operating lease the lessee reports the lease payments as depreciation expense For an operating
When Lydia started her vending machine business, she instituted flexible budgeting for the first few months of operations. Her first monthly budget numbers were these: Cost of g
Q. Calculate infant mortality rate? Mid year population 440000 Late fatal death 29 No. of live birth 5200 No. of infant death 423 No. of mate
Third Inc. wishes to issue a perpetual callable bond. The current interest rate is 6%. Next year, there is a 30% chance that the interest rate will be 4.5% and a 70% chance that th
Consider the expected return and standard deviation of the following two assets: Asset 1: E[r1]=0.1 und σ1=0.3 Asset 2: E[r2]=0.2 und σ2=0.4 (a) Draw (e.g. with Excel) the
Conny Duffy started working for Dexter Company on Thursday and 9 hours on Frida. Her annual salary is $80,000 and she is exempt white-collar employee. Determine her gross pay for h
Your friend Peter is planning to set up a new business which will manufacture and sell wooden tables. The parts that make up the table consist of a wooden table top measuring 1m by
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