Oliver Queen, a cash basis taxpayer, has been operating a sole proprietorship vi

Question

Oliver Queen, a cash basis taxpayer, has been operating a sole proprietorship vigilante business for three seasons. This year he incorporates as Get the Point, Inc. He transfers the following items to the corporation:

Adjusted Basis

Fair Market

Value

$ 5,000

$ 5,000

150,000

160,000

With respect to this transaction:

The corporation’s basis in the computers of $5,000.

Ollie has no recognized gain.

Ollie has a recognized gain of $5,000.

Ollie has a recognized gain of $10,000.

None of the above.

Adjusted Basis

Fair Market

Value

Bows, quivers and other hero gear

$ 5,000

$ 5,000

Secret headquarters

150,000

160,000

Mortgage payable (secured by the building and held for 15 years) 175,000 175,000 Computers and communication gear 10,000 5,000

Explanation / Answer

Particulars Adjusted Basis Fair Market Value Differences Bows, quivers and other hero gear $ 5,000 $ 5,000                               -   Secret headquarters $                 1,50,000.00 $          1,60,000.00 $         -10,000.00 Mortgage payable (secured by the building and held for 15 years) $                 1,75,000.00 $          1,75,000.00 $                          -   Computers and communication gear $ 10,000 $ 5,000 $             5,000.00 Total Recognized Gain or loss $            -5,000.00 As per the above there is Loss of $ 5,000 Answer = Option e = None of the Above.

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