A finished ACC-465 Topic 2 formation basis schedule example, computing owner and entity basis for three contributions under sections 351 and 721 and showing where the built-in gain waits. Searches like "acc 465 topic 2 assignment example", "acc465 topic 2 sample" and "acc-465 topic 2 example" land here.
What a finished ACC-465 Topic 2 formation basis schedule looks like
Three contributions, each worth an illustrative $60,000, anchor the finished schedule: cash from the first owner, equipment with a $25,000 adjusted basis from the second, and land with a $40,000 basis from the third. The corporate panel tests section 351, finds the transferors hold all the stock and so meet the 80 percent control requirement, and records no gain. Stock basis follows section 358, so the owners hold $60,000, $25,000 and $40,000, and the corporation takes the equipment and land at carryover basis under section 362. The partnership panel reaches matching numbers through sections 721, 722 and 723. A reconciliation shows $55,000 of gain deferred rather than forgiven, $35,000 in the equipment and $20,000 in the land, and notes the equipment will be depreciated from $25,000, not $60,000.
How an ACC-465 Topic 2 example is structured
The schedule is laid out so both regimes can be read side by side. A contribution table opens it, listing each owner, the asset, its fair market value and its adjusted basis. The corporate panel follows in three steps: the qualification test under section 351, the owners' stock basis and the corporation's basis in what it received. The partnership panel repeats the same three steps under the partnership provisions, so any difference between the regimes shows up line against line. A deferred gain table then measures the gap between value and basis for each asset and names the owner who carries it. A depreciation note explains that carryover basis, not value, sets future deductions. The last paragraph flags two matters the schedule does not resolve, the allocation of built-in gain among partners and interests issued for services, and names both as later work.
Value and basis side by side
Every contribution is listed at both its fair market value and its adjusted basis, since the difference between the two is exactly what formation defers.
Control tested before nonrecognition
The corporate panel confirms the transferors own at least 80 percent of the stock immediately after the exchange before applying section 351 to any contribution.
Owner basis and entity basis separated
Each regime produces two basis figures per asset, the owner's outside figure and the entity's inside figure, and the schedule keeps both in view throughout.
Carryover basis drives depreciation
The entity depreciates the equipment from its $25,000 carryover basis, so formation shapes deductions for years rather than only the result on the day of contribution.
Limits named rather than worked
Built-in gain allocations among partners under section 704(c) and ownership issued for services are flagged as beyond an introductory schedule, with the governing rules named.
Where marks go in ACC-465 Topic 2
Setting basis at fair market value is the error that costs most on this schedule, since it quietly converts a deferral into a forgiveness. A paper giving the second owner a $60,000 stock basis has erased $35,000 of gain that should still be waiting. Papers that apply section 351 without testing control skip the condition that decides whether nonrecognition is available at all. Recording only the owners' basis and never the entity's leaves the depreciation figure with no support, and the entity would then claim deductions on value nobody paid tax on. Treating the partnership and corporate results as identical without showing the steps misses that the provisions differ even where the numbers match. Papers that stray at length into allocating built-in gain among partners have wandered into graduate work and usually shortchange the introductory steps.
Get an ACC-465 Topic 2 example written to your instructions
Send the ACC-465 Topic 2 instructions, your rubric and the contribution facts in your assignment. A custom example is written to those, with qualification tested, owner and entity basis computed for each asset under the regime your section uses, and deferred gain measured, returned in 24 to 48 hours. The first one is free.
ACC-465 Topic 2 questions, answered
Why is gain deferred rather than taxed at formation?
Because the owners have changed the form of their investment rather than cashed out. Section 351 for corporations and section 721 for partnerships defer recognition when property goes in for an ownership interest, and the carryover basis rules preserve the untaxed gain in both the owner's interest and the entity's asset. The gain surfaces later, on a sale of either, which is why the schedule tracks it by owner.
What happens if an owner contributes services instead of property?
The nonrecognition rules are written for property, and services are not property for this purpose. An owner who receives stock or a partnership interest in exchange for work generally has income equal to its value, and in the corporate case that owner's stock may not count toward the control test. The example flags the issue and leaves its detail to later coursework, since it changes the analysis considerably.
Does formation affect depreciation?
Yes, directly. The entity takes the contributor's adjusted basis in the asset, so the equipment in the example is depreciated from $25,000 even though it is worth $60,000. Owners sometimes expect deductions measured by value, and the schedule shows why that expectation fails. It is one of the plainest ways a decision made at formation keeps affecting the return for years afterward.