Fella
Contributor
Joined: 19 Nov 2011
Location: United States
Online Status: Offline
Posts: 68
|
| Posted: 14 Aug 2012 at 13:53 | IP Logged
|
|
|
Hi everyone,
I've been doing corp MC as many as I can possibly do.
Here is something I got stuck on and cannot explain to
myself and there are not enough examples in my book to
cover all the possible situations between shareholder and
corporation:
A shareholder buys 25% into a corp.
FMV of property given to crop: 80K
Adj. Basis given to corp: 40K
Liabilities assumed by corp: 50K
Cash contributed by shareholder to corp: 20K
Cash distributed by corp to shareholder: 0
Here are my calculations and please tell me if I am doing
this wrong:
Shareholder realized gain: 80K-40K = 40K (FMV-Adj.Basis)
Shareholder recognized gain: (Liabilities assumed) 50K -
40K (adj. basis) = 10K
Shareholder Basis: 40K (adj. basis) + 10K (recognized
gain) + 20K (cash contributed to corp) - 50K (debt
assumed by corp) = 20K
I am not sure if there is a basis for this shareholder
because the property he gave to the corp had less adj.
basis (40K) than the liabilities assumed (50K)... In that
case books says that shareholder's basis = 0. But what
happens to the cash contributed to the corp (20K)???
Tax basis for the corp: 50K (greater of adj. basis or
liabilities assumed 40K vs. 50K) + 10K (shareholder
recognized gain) = 60K
Am I doing this right or wrong??? Book shows that Tax
basis for corp = 40K (adjusted basis of property received
by corp).
Book does not show shareholder realized gain, recognized
gain, and basis. It only shows Corp's tax basis of 40K.
Thank you
|
Active Topics 
Memberlist 
Search 
Help
Register 
Login
Topic: A little confused
Topic Closed)
