Tom and Gail form Owl Corporation with the following consideration:

		Consideration Transferred
		Basis to Transferor		Fair Market Value		Number of Shares Issued
From Tom
	Cash	$50,000		$50,000
	Installment note	240,000		350,000		40
From Gail
	Inventory	60,000		50,000
	Equipment	125,000		250,000
	Patentable invention	15,000		300,000		60

The installment note has a face amount of $350,000 and was acquired last year from the sale of land held for investment purposes (adjusted basis of $240,000). Regarding these transactions, provide the following information:

Note: If an amount is zero, enter "0".

a. Tom's recognized gain or loss is $.

b. Tom's basis in the Owl Corporation stock is $.

c. Owl Corporation's basis in the installment note is $.

d. Gail's recognized gain or loss is $.

e. Gail's basis in the Owl Corporation stock is $.

f. Owl Corporation's basis in the inventory is $ and equipment is $. Its basis in the patentable invention is $.

g. Would your answers to the preceding questions change if Tom received common stock and Gail received preferred stock?

h. Would your answers change if Gail was a partnership instead of an individual?

Answer rating: 100% (QA)

a No gain or loss is recognized by Tom b Adjusted basis of Tom in Owls stock 29000... View the full answer