22. Naney, Guy, and Rod form Gloldanch, Companwing comaudrahion Mrustod F Market

Question

22. Naney, Guy, and Rod form Gloldanch, Companwing comaudrahion Mrustod F Market From Nancy Inventory From Guy- Basis Cash 120,000 $120,000 30,000 Land and building Legal and accounting services to incorporate shares to Rod. In addition, Guy receives $50,000 in cash in the transaction (1S points) 120,000 250,000 From Rod- 50,000 Goldfinch issues 500 shares of stock as follows : 250 shares to Nancy, 200 shares to Guy, and a. How much gain or income do Naney, Guy, or Rod recegnize? Indicate how mach Nancy Rod b. What basis does Guy have in Goldfinch? (5 points) What basis does Goldfinch Company have in the inventory? In the land and build (10 points) c. Inventory Land and building

Explanation / Answer

a Nancy recognizes no gain.

Due to the boot he receives, Guy recognizes $50,000 of gain.

Rod has ordinary income of $50,000 for the services he performs.

b.Guy’s basis in the Goldfinch stock is $120,000 [$120,000 (basis in the land and building) + $50,000 (gain recognized) – $50,000 (boot received)].

c.Goldfinch Corporation’s basis in the

inventory is $90,000.

Its basis in the land and building is $170,000 [$120,000 (Guy’s basis) + $50,000 (gainrecognized by Guy)].

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