Quentin, Tara and Tito form a business entity with each contributing the following.

	Adjusted Basis			Fair Market Value
Quentin: Cash	$220,000			$220,000
Tara: Land	$55,000			90,000
Tito: Services				60,000

Their ownership percentages will be as follows.

Quentin	40%
Tara	40%
Tito	20%

Tara’s land has a $30,000 mortgage that is assumed by the entity. Tito is an attorney who receives her ownership interest in exchange for legal services. Determine the recognized gain to the owners, the basis for their ownership interests, and the entity’s basis for its assets if the entity is organized as:

If an amount is zero, enter "0".

a. Entity: Partnership.

Recognized Gain	Partners' Basis
Quentin	$	$
Tara	$	$
Tito	$	$

Asset	Partnership's Basis
Cash	$
Land	$
Organizational Costs	$

b. Entity: C corporation.

C corporation
	Recognized Gain	Shareholders' Basis
Quentin	$	$
Tara	$	$
Tito	$	$

Asset	C Corporation's Basis
Cash	$
Land	$
Organizational Costs	$

c. Entity: S corporation.

S corporation
	Recognized Gain	Shareholders' Basis
Quentin	$	$
Tara	$	$
Tito	$	$

Asset	S Corporation's Basis
Cash	$
Land	$
Organizational Costs	$

Answer rating: 100% (QA)

Solution a As per section section 721 no gain or loss is recognized subsequent to contribution of pr... View the full answer