Dan and Patricia form Crane Corporation. Dan transfers land (worth $200,000, basis of $60,000) for 50% of the stock in Crane. Patricia transfers machinery (worth $150,000, adjusted basis of $30,000) and provides services worth $50,000 for 50% of the stock.
a. Will the transfers qualify under § 351? Explain.
b. What are the tax consequences to Dan and Patricia?
c. What is Crane Corporation's basis in the land and the machinery?