Solution-What are the amount and character of Ted recognized

What are the amount and character of Ted recognized

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Reference no: EM131826275

Problem - Incorporating a Cash Basis Proprietorship:

Ted decides to incorporate his medical practice. He uses the cash method of accounting. On the date of incorporation, the practice reports the following balance sheet:

	Basis	FMV
Assets
Cash	$5,000	$5,000
A/R	$0	$65,000
Equip. (net of $15,000 depreciation)	$35,000	$40,000
Total	$40,000	$110,000

Liabilites and Owner's Equity
Current liabilities	$0	$35,000
Note payable on equip.	$15,000	$15,000
Owner's equity	$25,000	$60,000
Total	$40,000	$110,000

All the current liabilities would be deductible by Ted if he paid them. Ted transfers all assets and liabilities to a professional corporation in exchange for all of its stock.

A) What are the amount and character of Ted's recognized gain or loss?

B) What is Ted's basis in the stock?

C) What is the corporation's basis in the property?

D) Who recognized income on the receivables upon their collection? Can the corporation obtain a deduction for the liabilities when it pays them?

Reference no: EM131826275

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What are the amount and character of Ted recognized

Reference no: EM131826275

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