During 2018, Jimmy Incorporates His Data Processing Business $\text { What will be the basis of the assets to the corporation after the transfer? }$

question 8

Short Answer

During 2018, Jimmy incorporates his data processing business. Jimmy is the sole shareholder. The following assets are transferred to the corporation:
$$\begin{array}{l}\begin{array} { l c } \text { Cash } & \$ 2,000 \\\text { Computer Equipment: } & \\\text { Fair market value } & 20,000 \\\text { Adjusted basis } & 12,000 \\\text { Original cost } & 24,000 \\\text { Furniture: } & \\\text { Fair market value } & 20,000 \\\text { Adjusted basis } & 32,000 \\\text { Original cost } & 64,000\end{array}\\\end{array}$$

$\text { What will be the basis of the assets to the corporation after the transfer? }$

$\begin{array} { c c c } \text { Computer Equipment } & \text { Furniture } \\\end{array}$
A) $\begin{array} { c c c } &&\$ 20,000 & &&&& \$ 20,000 \\\end{array}$
B) $\begin{array} { c c c } &&\$ 12,000 &&&& & \$ 20,000 \\\end{array}$
C) $\begin{array} { c c c } &&\$ 20,000 &&&&& \$ 32,000 \\\end{array}$
D) $\begin{array} { c c c }&& \$ 12,000 &&&&& \$ 32,000\end{array}$

• A)\(\begin{array} { c c c } &&\$ 20,000 & &&&& \$ 20,000 \\\end{array}\)
• B)\(\begin{array} { c c c } &&\$ 12,000 &&&& & \$ 20,000 \\\end{array}\)
• C)\(\begin{array} { c c c } &&\$ 20,000 &&&&& \$ 32,000 \\\end{array}\)
• D)\(\begin{array} { c c c }&& \$ 12,000 &&&&& \$ 32,000
• \end{array}\)

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Definitions:

Salaries And Wages Payable

Liabilities representing amounts owed by an employer to its employees for work performed but not yet paid.

FICA Taxes Withheld

The part of wages that are taken out for Social Security and Medicare, as required by the Federal Insurance Contributions Act.

FICA Taxes

Taxes collected from both employers and employees in the United States to fund Social Security and Medicare, consisting of both Social Security and Medicare taxes.

Supplemental Retirement

Additional retirement savings and income plans beyond standard pension arrangements, often offered to employees as part of their benefits package.