Yvonne and Simon form Ion Corporation. Yvonne transfers equipment (basis of $248,800 and fair market value of $373,200). Simon invests $298,560 of cash. They each receive 100 shares in Ion Corporation, worth $298,560, but Yvonne also receives $74,640 in cash from Ion. Calculate Ion Corporation's basis in the equipment and determine Yvonne and Simon's basis in the Ion stock.

Question

Amethyst

Business

13 December, 21:08

Yvonne and Simon form Ion Corporation. Yvonne transfers equipment (basis of $248,800 and fair market value of $373,200). Simon invests $298,560 of cash. They each receive 100 shares in Ion Corporation, worth $298,560, but Yvonne also receives $74,640 in cash from Ion. Calculate Ion Corporation's basis in the equipment and determine Yvonne and Simon's basis in the Ion stock.

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Alana Little · Answer 1

Ion Corporation's basis in the equipment = $323,440

Yvonne basis = $248,800

Simon basis = $298,560

Explanation:

Given that

Yvonne basis = $248,800

Yvonne receives in cash from Ion = $74,640

Simon basis = $298,560

The computation of Ion Corporation's basis, Yvonne and Simon's basis is shown below:-

Ion Corporation's basis in the equipment = Yvonne basis + Yvonne receives in cash from Ion

= $248,800 + $74,640

= $323,440

Yvonne basis = $248,800

Simon basis = $298,560