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Allie forms Broadbill Corporation by transferring land (basis of $125,000, fair market value of $775,000), which is subject to a mortgage of $375,000. One month prior to incorporating Btroadbill, Allie borrows $100,000 for personal reasons and gives the lender a second mortgage on the land. Broadbill Corporation issues stock worth $300,000 to Allie and assumes the mortgages on the land.a. What are the tax consequences to Allie and to Broadbill Corporation?b. How would the tax consequences to Allie differ if she had not borrowed the $100,000?Red Corporation wants to set up a manufacturing facility in a Midwestern state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of $3 million) and cash of $1 million.a. How much gain or income, if any, must Red Corporation recognize?b. What basis will Red Corporation have in the land?c. Within one year of the contribution, Red constructs a building for $800,000 and purchases inventory for $200,000. What basis will Red Corporation have in each of those assets?
Frank, Cora, and Mitch are equal shareholders in Purple Corporation. The corporation's assets have a tax basis of $50,000 and a fair market value of $600,000. In the current year, Frank and Cora each loan Purple Corporation $150,000. The notes to Frank and Cora bear interest of 8% per annum. Mitch leases equipment to Purple Corporation for an annual rental of $12,000. Discuss whether the shareholder loans from Frank and Cora might be reclassified as equity. Consider in your discussion whether Purple Corporation has an acceptable debt-equity ratio.
Factors affect Decision Making These decisions need consideration of factors as like A. The level of market possible to be available in future B. The strategy that compe
Go the Hershey website to learn how to make Hershey chocolate. (There is also a "print friendly" version of the chocolate making process at the end of the video.) Review the proces
Mr. Homer Simpson, President and Chief Executive Officer of Duff's Beer Making Supplies Inc. recently hired you as the new budget analyst for his company. As your first duty, he h
Incremental Costs as Relevant Costs An incremental cost is specifically incurred with the following a course of action and ignorable if such action is not implemented. It cont
Bottoms Up company produces high quality sports equipment. the companie''s racket division manufactures three tennis rackets- the Standard, Deluxe and the Pro that are widely used
Cost Volume Profit Analysis 1. Post Publishers has collected the following data for recent months: Month Issues published Total cost May
You are assisting the accountant on the preparation of the final accounts of a business with a year-end of 31 December. A trial balance has been drawn up and a suspense account ope
Woodall Ltd has two production departments, X and Y. For month 2, the company budgets its overhead costs as: X Y Variable overhead
information for the year ended December 31, 2010: Direct labor $16,840 Direct material used 16,300 General and administrative expenses 14,240 Indirect production costs 16,780 Selli
You are a beginner accountant with a large accountancy firm and a training day has been organised to update all technical staff on a range of topics across numerous technical disci
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