Exam 9: Acquisitions of Property

Courtney is interested in purchasing The Matrix Company. Matrix's assets are: ? Adjusted Basis Fair Market Value Cash \ 2,300 \ 2,300 Inventory 16,500 19,200 Equipment 13,000 9,000 Land 25,000 40,500 Building 66,600 \ 129,000 Totals \ 123,400 \ 200,000 ? I.If Courtney buys the stock of The Matrix for $225,000, the total basis in the assets will be $200,000. II.If Courtney pays Matrix $240,000 for the Matrix assets, Courtney's total basis in all of the assets of the business will be $123,400. ?

Match each statement with the correct term below. -Primary valuation date

Terri owns 1,000 shares of Borneo Corporation common stock. On March 31 of the current year, when the stock is trading at $2 per share, Borneo declares a 5% stock dividend with the option to receive $2 cash per dividend share in lieu of taking the dividend shares. The dividend is distributed on April 30. Terri elects to receive the stock shares rather than the cash dividend. What are the tax effects for Terri? I.Terri's stock dividend is nontaxable. II.Terri's basis in her new shares is $100. ​

Match each statement with the correct term below. -Realized loss

Tien purchases an office building for $400,000, paying a $75,000 cash down payment and borrowing $325,000 from Atlantic Meridian Mortgage Co. The purchase price is properly allocated 90% to the building and 10% to the land. Two years after the purchase, Tien remodeled one floor of the building at a cost of $25,000. Annual maintenance costs and property taxes total $4,000. A total depreciation of $36,000 is deducted over the 3 years. Determine the adjusted basis of the building and the land as of the end of year 3:

Match each statement with the correct term below. -Adjusted basis