(Answered) Problemashley williams a sole proprietor is engaged in the

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Ashley Williams, a sole proprietor, is engaged in the deaditeeradication business. Ashe accrues only trouble, he uses the cash basis of accounting. In 2016, he incorporates as Boomstick Corporation. Ash transfers assets (basis of $400,000; FMV of $2 million), trade accounts payable of $110,000, and loan due to a bank of $390,000. The proceeds from the bank loan were used by him to provide operating funds for the business. He receives 100% of the stock.

a. Does Ashley recognize any gain or loss on the incorporation? Explain.

b. What basis does he have in the stock?

c. What basis does the corporation have in the assets it receives?

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