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MA_775_DIABLO [31]
3 years ago
12

Rhonda and Marta form Yo Yo Corporation. Rhonda transfers land (basis of $55,000 and fair market value of $180,000) for 50 share

s plus $20,000 cash. Marta transfers $160,000 cash for 50 shares in Yo Yo Corporation.
a. Rhonda’s basis in the YoYo Corporation stock is $55,000.
b. Rhonda recognizes a gain on the transfer of $125,000.
c. YoYo Corporation’s basis in the land is $55,000.
d. YoYo Corporation’s basis in the land is $180,000.
Business
2 answers:
Vadim26 [7]3 years ago
8 0

Answer

A. Rhonda’s basis in the YoYo Corporation stock is $55,000.

Explanation:

Naddik [55]3 years ago
7 0

Answer:

a. Rhonda’s basis in the YoYo Corporation stock is $55,000.

Explanation:

The computation of Rhonda’s basis in the YoYo Corporation stock is shown below:-

Rhonda’s basis in the YoYo Corporation stock = Basis of the land transferred + gain recognized - Boot received

= $55,000 +$20,000 - $20,000

= $75,000 - $20,000

= $55,000

Rhonda recognizes income to the extent of the $20,000 cash received. So, stock basis is $55,000.

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