Alex and Leah formed R Corporation in order to provide plumbing services. Alex contributed a truck with a basis of $40,000 and a fair market value of $50,000. Leah contributed a building with a basis of $20,000 and a fair market value of $50,000. Both received 500 shares of voting common stock in exchange for their contributions.

Calculate:

a. any gain or loss recognized on the exchange,

b. each shareholder’s stock basis,

c. R Corporation’s basis in the transferred assets.

Answer rating: 100% (QA)

a in accordance with section 351 no gain or loss will be recognized in respect of a property tran... View the full answer