Zoe Ann Transfers Machinery Having a $36,000 Adjusted Basis and a $70,000

question 105

Essay

Zoe Ann transfers machinery having a $36,000 adjusted basis and a $70,000 FMV for all 100 shares of Zeema Corporation's stock. Before the transfer, Zoe Ann used the machinery in her business. She originally paid $50,000 for the machinery and claimed $14,000 of depreciation before transferring the machinery. Zoe Ann recaptures no depreciation on the transfer and the recapture potential is transferred to Zeema Corporation. Zeema sells the machine for $66,000 after it had depreciated the machine an additional $4,000. What is Zeema's gain on the machine and what is its character?

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Definitions:

Diagnostic Criterion

A specific symptom or characteristic used as part of a set of criteria to identify and diagnose a particular disease or disorder.

Bipolar II Disorder

Form of bipolar disorder in which only hypomanic episodes are experienced and the depressive component is more pronounced.

Hypomania

State in which an individual shows mild symptoms of mania.

Hypermania

A severe form of mania characterized by excessive energy, euphoria, grandiosity, and a decreased need for sleep.