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:

Recovered Memories

Memories of traumatic events that were not remembered for a long period, possibly due to psychological repression, and are later recalled.

Repressed Memories

Memories that have been unconsciously blocked due to the memory being associated with a high level of stress or trauma.

Mnemonics

Memory aids or techniques that use associations, patterns, or abbreviations to help recall information more easily.

Misleading Questions

Questions that suggest a particular answer or contain assumptions that can distort the respondent's true response.