Chi Transfers Assets with a $150,000 FMV (Basis $80,000)and $100,000

question 94

Essay

Chi transfers assets with a $150,000 FMV (basis $80,000)and $100,000 of business-related liabilities to a corporation in exchange for 100% of the corporation's stock with a FMV of $50,000.The corporation assumes the $100,000 mortgage.
a.What is the amount of gain recognized by Chi?
b.What is the adjusted basis if the stock received by Chi?
c.What is the basis of the assets to the corporation?

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Definitions:

Financing

The act of supplying capital for company operations, acquiring assets, or investing.

Major Kitchen Appliances

Large household appliances such as refrigerators, stoves, and dishwashers that are essential for kitchen operations.

Retail Credit Company

A company specializing in the issuance and management of credit to consumers, often directly linked to specific retail stores or brands.

Work-in-Progress

Inventory that includes goods in the process of being manufactured but not yet completed.