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sergey [27]
3 years ago
6

Loonis Inc. and Rhea Company formed LooNR Inc. by transferring business assets in exchange for 1,000 shares of LooNR common stoc

k. Loonis transferred assets with a $820,000 FMV and a $444,000 adjusted tax basis and received 820 shares. Rhea transferred assets with a $180,000 FMV and a $75,000 adjusted tax basis and received 180 shares. Compute Loonis and Rhea's realized and recognized gain on the exchange.
Business
1 answer:
Lera25 [3.4K]3 years ago
7 0

Answer:

<em>Lioonis and Rhea's realized gain of exchanged cannot be determined.</em>

<em>Explanation:</em>

<em>From the given question, let us recall that,</em>

<em>Loonis transferred assets with a=  $820,000 FMV and a $444,000 adjusted tax basis and received 820 shares.</em>

<em> Rhea transferred assets with a $180,000 FMV and a $75,000 adjusted tax basis and received 180 shares.</em>

<em>The next step is to compute Loonis and Rhea's realized and recognized gain on the exchange.</em>

<em>Now,</em>

<em>The stock of Loonis has a  $444,000 substituted basis; Rhea has a $75,000 substituted basis</em>

<em>Loonis assets have a $519,000 carryover basis.</em>

<em>Therefore, Loonis and Rhea's realized and recognized gain on the exchange cannot be determined.</em>

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