Amil and Rebecca form Hyde Corporation with the following consideration: Conside

Question

Amil and Rebecca form Hyde Corporation with the following consideration: Consideration Transferred Basis to Fair Market Number of Transferor Value Shares Issue From Amil- Cash $25,000 $25,000 Installment note 80,000 215,000 2,400 From Rebecca- Cash Building Land 60,000 300,000 31,000 60,000 400,000 40,000 5,000 Regarding these transactions, provide the following information: If an amount is zero, enter "O". a. Amil's recognized gain or loss is b. Amil's basis in the Hyde Corporation stock is c. Hyde Corporation's basis in the installment note is$ d. Rebecca's recognized gain or loss is $ e. Rebecca's basis in the Hyde Corporation stock is f. Hyde Corporation's basis in the building is Its basis in the land is

Explanation / Answer

The loss or profit to be recognized is Fair Market Value - Cost Price

Question a

For Amil the profit recognized is:

(25000 + 215000) - (25000 + 80000) = 135,000

Question b

Amil's basis for the stock will be the fair value of assets transferred = (25000 + 215000) = 240,000

Question c

The installment note would be recorded in Hyde at 215,000

Question d

Rebeccas Gain recognized is:

(60000 + 400000 + 40000) - (60000 + 300000 + 31000) = 109,000

Question e

Receccas basis in the Hydes Corp. stock is:

(60000 + 400000 + 40000) = 500,000

Question f

Basis on Building = 400,000

Basis on Land = 40,000

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