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:

Scared

A feeling of fear or anxiety triggered by a perceived threat or danger.

Heart Racing

A sensation or condition where the heart beats significantly faster than normal, which can be due to excitement, nervousness, or physical exertion.

Amygdala

A part of the brain's limbic system involved in processing emotions, especially fear and pleasure, and forming emotional memories.

Conditioned Fear

A learned response that links a previously neutral stimulus with fear, resulting from the repeated pairing of that stimulus with an aversive event.