Bundy owns Bundiful World, a sole proprietorship. He incorporates as Bundiful, Inc. transferring all of the proprietorship’s assets (FMV: $350,000, basis: $ 275,000) for all of the stock. Bundiful, Inc. also assumes $15,000 of liabilities, $14,500 were business related, the remaining $500 was for a DVR so his wife, Peg, could record Oprah. Based on the above: Answer a. Bundiful, Inc. has an asset basis of $275,000; Al has a stock basis of $260,000. b. Bundiful, Inc. has an asset basis of $290,000; Al has a stock basis of $260,000. c. Bundiful, Inc.
Al Bundy owns Bundiful World, a sole proprietorship. He incorporates as Bundiful, Inc. transferring all of the proprietorship’s assets (FMV: $350,000, basis: $ 275,000) for all of the stock. Bundiful, Inc. also assumes $15,000 of liabilities, $14,500 were business related, the remaining $500 was for a DVR so his wife, Peg, could record Oprah. Based on the above: Answer ?a.?Bundiful, Inc. has an asset basis of $275,000; Al has a stock basis of $260,000.???b.?Bundiful, Inc. has an asset basis of $290,000; Al has a stock basis of $260,000.???c.?Bundiful, Inc. has an asset basis of $290,000; Al has a stock basis of $290,000.???d.?Bundiful, Inc. has an asset basis of $275,000; Al has a stock basis of $275,000.???e.?Bundiful, Inc. has an asset basis of $290,000; Al has a stock basis of $275,000.??3 points Question 2 Archibald Leach incorporates his sole proprietorship as Cary On, Inc.. He transfers Cash of $12,000 and real estate (FMV: $200,000. basis: $135,000). Cary On assumes a mortgage on the real estate of $155,000 and accounts payable of $5,000 (all business use). Archie is on the cash basis. With respect to this transaction: Answer ?a.?Cary On has a basis in the real estate of $135,000.???b.?Cary On has a basis in the real estate of $135,000.???c.?Archie recognizes gain of $8,000.???d.?Archie recognizes gain of $13,000.???e.?Archie recognizes gain of $20,000.??3 points Question 3 Lucy and Desi form Babaloo, Inc. Lucy contributes business property (FMV: $200,000, basis $100,000) and provides managerial services in organizing Babaloo (FMV: $50,000). Desi contributes business property (FMV:$250,000, basis $75,000). Each receives one half of the stock. With respect to the transfers: Answer ?a.?Lucy and Desi will recognize gain.???b.?Lucy will recognize gain of $100,000 and income of $50,000.???c.?Babaloo will have a basis of $150,000 in Lucy’s property.???d.?Babaloo can take a business deduction of $50,000.???e.?None of the above.??3 points Question…
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