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Ted decides to incorporate his medical practice.He uses the cash method All the current l

Ted decides to incorporate his medical practice.He uses the cash method All the current l

 Ted decides to incorporate his medical practice.He uses the cash method All the current liabilities will bedeductible by Ted if he pays them. All the current liabilitieswould be deductible by Ted if he paid them. Ted transfers allassets and liabilities to a professional corporation in exchangefor all of its stock.

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

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 theircollection? Can the corporation obtain a deduction for theliabilities when it pays them?

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

 

 

 

 

 

 

Abhinav 04-Dec-2019

Answer (UnSolved)

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