ACC-317-Homework-Ch-18

Apr 29th, 2015
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32 a. Allie would have a gain of $350,000 under 357(c). However, under 357(b) Allie has boot of $475,000 due to the $100,000 cash that she borrows from Broadbill giving the lender a second mortgage. Because of this borrowed cash all liabilities that Allie has acquired are mnow considered boot, and she has boot of $475,000 which she must now claim. Consequently she has realized gain of $650,000 ($775,000 - $125,000 = stock of $300,000 + assumption of liabilities $475,000 – basis of land $125,000). Gain is recognized to the extent of the boot received of $475,000. Unfortunately for Allie, rule 357(b) predominates over rule 357(c).

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Leah PasternakFederal Taxation - ACC317Chapter 18: Corporations: Organization and Capital Structure Homework Submission32 a. Allie would have a gain of $350,000 under 357(c). However, under 357(b) Allie has boot of $475,000 due to the $100,000 cash that she borrows from Broadbill giving the l

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