Dewey, Cheathem, Anh, and Howe formed Integrity Co., a cC corporation. The share

Question

Dewey, Cheathem, Anh, and Howe formed Integrity Co., a cC corporation. The shareholders made the following contributions to the corporation in exchange for stock on January 2, Year1 Percent Stock Shareholder Contributions $20,000 in cash, property worth $60,000 ($40,000 basis) $10,000 in cash, property worth $50,000 ($30,000 basis), Shareholder Ownership Dewey 40% Cheathem 20% with related assumed recourse liability of $20,000 Anh 25% Property worth $60,000 ($50,000 basis), received $10,000 in cash from Integrity Co. Howe 15% $10,000 in cash, property worth $40,000 ($5,000 basis) with a related assumed recourse liability of $20,000 Complete the table below by entering the appropriate amounts for each item. Enter gains as positive values and losses as negative values. If a value is zero, enter a $ Integrity Co Tax Basis in Noncash Shareholder Tax Shareholder Shareholder Shareholder Basis in Co Stock Realized Gain Recognized Gain Property Received Dewey Cheathem $ Anh Howe

Explanation / Answer

Computation of net worth of Integrity Co a Corporation

Contributed by Amount ($)

Dewey ($ 20,000 + $ 60,000) 80,000

Cheathem ($ 10,000+$50,000 - $ 20,000) 40,000

Anh 60,000

Howe ($ 10,000+$40,000 - $20,000) 30,000

Toata Net worth 210,000

Shareholders shares

Shareholders Amount ($)

Dewey ($ 210,000 × 40%) 84,000

Cheathem ($ 210,000 × 20%) 42,000

Anh ($ 210,000 × 25%) 52,500

Howe ($ 210,000 × 15%) 31,500

Answer

$ 60,000

($20,000+$40,000)

$ 24,000

($84,000-$60,000)

$ 20,00

($10,000+$30,000-$20,000)

$ 22,000

($42,000-$20,00)

$ 2,500

($52,500-$50,000)

$ 10,000

(Boot)

$ 0 , it can not be negative

($10,000+$5,000-$20,000)

$ 31,500

($ 31,500-$ 0)

Shareholder Shareholder Tax Basis in Co Stock Shareholder Realized Gain Shareholder Recognized Gain Integrity Co tax basis in noncash property received Dewey

$ 60,000

($20,000+$40,000)

$ 24,000

($84,000-$60,000)

$ 0 $ 40,000 Cheathem

$ 20,00

($10,000+$30,000-$20,000)

$ 22,000

($42,000-$20,00)

$ 0 $ 10,000 Anh $ 50,000

$ 2,500

($52,500-$50,000)

$ 10,000

(Boot)

$ 50,000 Howe

$ 0 , it can not be negative

($10,000+$5,000-$20,000)

$ 31,500

($ 31,500-$ 0)

$ 0 $ 0

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