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:

Early-childhood

A period in human development from birth up to approximately 8 years, characterized by rapid physical and mental growth.

Physical Punishment

A disciplinary method that involves causing physical pain or discomfort to correct or control behavior.

Guilt

A feeling of responsibility or remorse for some offense, crime, wrong, whether real or imagined.

Authoritative

In parenting, a style characterized by high responsiveness and high demands, balancing strict rules with emotional warmth and flexibility.