Antoine, Becky, and Colleen form ABC Corporation by contributing the following items in exchange for stock in
Question:
Antoine, Becky, and Colleen form ABC Corporation by contributing the following items in exchange for stock in ABC Corporation: Adjusted Basis Fair Market Value
of property given of property given Shares of Stock Received
Antoine:
Cash $30,000 $30,000
Equipment 300,000 420,000 4500 shares
Becky:
Land $100,000 $480,000 3000 shares*
Mortgage 150,000 (150,000)
Colleen:
Services $0 $50,000 500 shares
Additional information:
· Colleen has a PhD in computer technology and designed their online platform.
· *Becky received $30,000 of cash in addition to 3,000 shares of ABC Stock.
Questions:
a. How much gain, loss, or income does Antoine recognize from contributing cash and equipment in exchange for 4500 shares of stock?
b. What is Antoine's basis in his ABC stock?
c. How much gain, loss or income does Becky recognize from contributing her land? (Note: ABC will assume the mortgage).
d. What is Becky's basis in ABC stock?
e. How much gain, loss, or income does Colleen recognize from receiving stock in exchange for services?
f. What is Colleen's basis in ABC Stock?
South Western Federal Taxation 2016 Corporations Partnerships Estates and Trusts
ISBN: 9781305399884
39th edition
Authors: James Boyd, William Hoffman, Raabe, David Maloney, Young