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:

Final Offer

The last proposal made in a negotiation, beyond which the offeror is unwilling to make further concessions.

Outside Options

Alternatives available to negotiating parties, especially if current negotiations fail, influencing their bargaining power.

Believable Threat

A threat that is credible and convincing to the recipient, often used in negotiation or strategic situations.

Non-Strategic Sequential

A term not commonly recognized as a standard key term in business or strategy contexts. NO.