Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a, b, c, form x corporation to develop real estate

A, B, C, form X Corporation to develop real estate. A contributes land with an...

90.2K

Verified Solution

Question

Accounting

A, B, C, form X Corporation to develop real estate. A contributes land with an FMV of $1 million and an adjusted basis of $900,000. A received 500 shares of stock of X ($1,000 each) and a 10-year, $500,000 promissory note of X Corporation bearing a market rate of interest. B & C each contribute land with an FMV of $500,000 and adjusted basis of $50,000. They each receive 250 shares of X stock and a 10-year note of X for $250,000 having a market rate of interest. In addition, X Corp borrows $5 million from a 3rd party lender.
Are the various promissory notes of X Corp to A, B, and C debt or equity?
Would your answer change if the principal and interest of the notes to A, B, and C were subordinated to the debt owned by the outside lender?
Would you answer chance if the principal and interest of the note to A, B, and C were to be paid only out of profits of X Corp?
Why A, B, and C and X care whether the notes are debt of equity?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Calculus
1.2K views

Find the indefinite integral using substitution for 10z 52 2 10x 272 C 5x 4...

Mechanical Engineering
1.2K views

Describe two examples of automation technology that contributed to the development of additive manufacturing and why...

Basic Math
1.2K views

Price Bedroom Bathroom Cars SQ FT 298,000 3 2.5 0 1,566 319,900 3 2.5 0 2,000 354,000 3 2 2 0 374,900 4 2.5 0 2,816 385,000 4 2 0 0 389,000 3 2.5 0 2,248 399,000 4 3 0 2,215 415,000 3 2.5 0 3,188 444,900 3 2 0 2,530 450,000 3 2 0 1,967 465,000 4 3 0 2,564 340,000 4 2.5 0 2,293 275,000 3 2.5 2 1,353 425,000 3 2 0 1,834 250,000 3 2.5 0 5,837 450,000 3 2.5 0 9,060 390,000 3 3.5 0 1,002 269,000 3 2.5 0 1,680 425,000 3 2.5 2 4,356 425,000 2 2.5 2 2,993 425,000 3 3 0 4,356 429,900 5 3.5 1 2,154 400,000 3 2.5 2 1,846 399,900 3 2 1 2,018 388,990 4 4 0 2,295 Plz do all the calculations on excel n show the excel files. Construct and interpret a...

Physics
1.2K views

15 Example 8 A square of side 4 cmand uniform thic divided into four equal...

Physics
1.2K views

Question given below has four answer options out of which ONE OR MORE is are...

Basic Math
1.2K views

The following information is known to be true All seadolls are birds Seadolls nest on...

Basic Math
1.2K views

We are standing on the top of a 512 feet tall building and launch a...

Accounting
1.2K views

Quality Motor Company is an auto repair shop that uses standards...

Accounting
1.2K views

You loaned your employee $10,000 at 10% of annual interest rate on November 1,2019 for...

Accounting
1.2K views

Question 2 of 35. If a sole proprietor pays an independent contractor $ or more...

Accounting
1.2K views

the Pre ying Overhead to Pr ling Overhead at the End of the Year, Adjusting...

Finance
1.2K views

Calculate the Weighted Average Cost of Capital for Amazon and eBay. Use the following: WACC...