Sean and Vickie Are Going to Establish a Business

question 15

Essay

Sean and Vickie are going to establish a business.Sean will contribute cash of $250,000 for a 50% interest,and Vickie will contribute land and a building worth $270,000 (adjusted basis of $90,000)for a 50% interest.The land and building is encumbered by a $20,000 mortgage which the entity assumes.
a.Determine the tax consequences of the contribution to Sean, Vickie, and the entity if the business is an S corporation.
b.Determine the tax consequences of the contribution to Sean, Vickie, and the entity if the business is a partnership.
c.Determine the tax consequences of the contribution to Sean, Vickie, and the entity if the business is a C corporation.

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Definitions:

Secretory Phase

A phase of the menstrual cycle following ovulation where the endometrium prepares for potential implantation of an embryo.

Uterine Cycle

The monthly cycle of changes in the uterus, including menstruation, in preparation for possible pregnancy.

Progesterone

A hormone released by the ovaries involved in the menstrual cycle, pregnancy, and embryogenesis of humans and other species.

Spiral Glands

The spiral glands refer to the coiled tubular glands in the endometrium that significantly contribute to the uterine lining's thickness and functionality.