AICPA REG question

  • Creator
    Topic
  • #181876
    zi007ad
    Participant

    Hey,i was solving the AICPA released questions and i wasn’t convinced by AICPA solution and they didn’t add a clarification for the solution, i suggest it will be $0 while they solved it $6,000

    “”The sole shareholder of an S corporation contributed equipment with a fair market value of $20,000 and a basis of $6,000 subject to $12,000 liability. What amount is the gain, if any, that the shareholder must recognize?

    A $0

    B. $6,000

    C. $8,000

    D. $12,000″”

    Thank you

    *COLORADO*
    REG: 58,41,74,74,74,74,77
    BEC: 67,76*,79
    FAR: 62,68,60,75
    AUD: 76*,64,66,81
    * Expired

Viewing 10 replies - 1 through 10 (of 10 total)
  • Author
    Replies
  • #473726
    hjc
    Member

    Corporation assumes the liab. Since it is greater than the basis it is consider a boot (6000-12,000) = 6000 gain to the shareholder

    #473784
    hjc
    Member

    Corporation assumes the liab. Since it is greater than the basis it is consider a boot (6000-12,000) = 6000 gain to the shareholder

    #473728
    KiwiCPA
    Member

    Reg 82; FAR 75; AUD 91; BEC 11/9/13; result due - 11/22/13

    #473786
    KiwiCPA
    Member

    Reg 82; FAR 75; AUD 91; BEC 11/9/13; result due - 11/22/13

    #473730
    hjc
    Member

    It is your basis that cannot go below zero. The question is asking about recognize gain to the shareholder

    NBV

    <liab assummed>

    =boot

    That's how they arrive to 6000 gain

    #473788
    hjc
    Member

    It is your basis that cannot go below zero. The question is asking about recognize gain to the shareholder

    NBV

    <liab assummed>

    =boot

    That's how they arrive to 6000 gain

    #473732
    zi007ad
    Participant

    Thank you All 🙂

    *COLORADO*
    REG: 58,41,74,74,74,74,77
    BEC: 67,76*,79
    FAR: 62,68,60,75
    AUD: 76*,64,66,81
    * Expired

    #473790
    zi007ad
    Participant

    Thank you All 🙂

    *COLORADO*
    REG: 58,41,74,74,74,74,77
    BEC: 67,76*,79
    FAR: 62,68,60,75
    AUD: 76*,64,66,81
    * Expired

    #473734

    i think the real meat and potatoes of the question is the type of orginization. although an s corporation is a flow through like a partnership, s corp liabilities do not increase basis like a partnerhsip would, assuming recourse debt.

    ALL 4 parts passed summer 13
    Ethics October 13
    Experience (waiting)

    Becker Only

    #473792

    i think the real meat and potatoes of the question is the type of orginization. although an s corporation is a flow through like a partnership, s corp liabilities do not increase basis like a partnerhsip would, assuming recourse debt.

    ALL 4 parts passed summer 13
    Ethics October 13
    Experience (waiting)

    Becker Only

Viewing 10 replies - 1 through 10 (of 10 total)
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