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How much gain will the merediths recognize on the exchange

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Reference no: EM132462094

Mr. and Mrs. Meredith own a sole proprietorship consisting of business assets with a $649,000 aggregated adjusted tax basis. According to an independent appraisal, the business is worth $2 million. The Merediths are planning to transfer the entire business to Molleri Inc. in exchange for 20,000 shares of Molleri stock.

Question 1: How much gain will the Merediths recognize on the exchange of business assets for stock and what basis will they take in the stock if:

Problem a. Molleri has 23,000 shares of outstanding stock immediately after the exchange?

Problem b. Molleri has 500,000 shares of outstanding stock immediately after the exchange?

Reference no: EM132462094

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