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goldfiish [28.3K]
3 years ago
13

Martin transfers real estate with an adjusted basis of $260,000 and fair market value of $350,000 to a newly formed corporation

in exchange for 100% of the stock. The corporation assumes the liability on the transferred real estate in the amount of $300,000. Determine Martin’s recognized gain on the transfer and the basis for his stock.
Business
2 answers:
sleet_krkn [62]3 years ago
4 0

Answer:

Therefore, the gain on the transfer is $40,000

Explanation:

Calculation of Martins gain

Particulars                                                  Amount

Liability on the transferred real estate    $300,000

Less: adjusted real basis value                $260,000

Recognized gain                                        $40,000

Therefore, the gain on the transfer is $40,000

katrin [286]3 years ago
3 0

Answer:

$40,000

Explanation:

We can calculate recognized gain on the transfer and basis for his stock just by deducting adjusted basis value from liability on the transfered real estate.

Calcuation

iability on the transfered real estate        $300,000

less: adjusted basis value                       ($260,000)

Gain recognized                                        $40,000

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Answer:

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In this question the predetermined overhead rate is 120% of direct labor cost.

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