In March of Year 2, Mike contributed the following two properties, which he acquired in February of Year 1, to Kansas Corporation in exchange for additional Kansas stock: (1) land having a $50,000 FMV and a $75,000 basis and (2) another property having an $85,000 FMV and a $70,000 adjusted basis. Kansas’ employees use the land as a parking lot until Kansas sells it in March of Year 3 for $45,000. One month after the sale, in April of Year 3, Kansas adopts a plan of liquidation.
a. What is Kansas’ adjusted basis in the land immediately after its contribution in March of Year 2?
b. What is Kansas’ recognized gain or loss on the subsequent land sale?
c. How would your answer to Part b change if the land were not used in Kansas’ trade or business?
d. How would your answer to Part c change if Mike contributed the land and other property in March of Year 1 instead of March of Year 2?
e. How would your answer to Part c change if the corporation sold the land (contributed in March of Year 2) for $80,000 instead of $45,000?