Solved

Rita Forms Finch Corporation by Transferring Land (Basis of $125,000;

Question 18

Essay

Rita forms Finch Corporation by transferring land (basis of $125,000; fair market value of $750,000) which is subject to a mortgage of $375,000. Two weeks prior to incorporating Finch, Rita borrows $125,000 for personal purposes
and gives the lender a second mortgage on the land. Finch Corporation issues stock worth $250,000 to Rita and assumes the two mortgages on the land. What are the tax consequences to Rita and to Finch Corporation?

Correct Answer:

verifed

Verified

Both §§ 357(b) and (c) are applicable. B...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q13: Wren Corporation (a minority shareholder in Lark

Q14: A person who performs services for a

Q15: A corporation's holding period for property received

Q16: Mary transfers a building (adjusted basis of

Q17: Blue Corporation (a seller of goods to

Q19: Silver Corporation receives $1 million in cash

Q20: Jane transfers property (basis of $180,000 and

Q21: To induce Yellow Corporation to build a

Q22: If a transaction qualifies under § 351,

Q23: In determining whether § 357(c) applies, assess