Comprehensive Problem; 14-107:
Jones, Able, and Smith want to form Shriver Corporation. They want to accomplish this in the
most tax efficient (least costly) way possible. They have asked for advice. The counselor will
receive $10,000 (in stocks and bonds). The relevant information follows:
	PARTY	GIVES			RECEIVES
	Jones	FMV	Adj. Basis
	Machine	$100,000	$70,000	*
	Land	$40,000	$20,000		(1) 25 shares of stock
	Building	$65,000	$45,000	**	(2) $20,000
		* Acquired for $85,000; s.l. depreciation taken
		** Acquired for $70,000; s.l. dep. Taken; liab. Of $60,000
		assumed by Shriver Corp.
	Able
	Machine	$70,000	$80,000	*	(1) 8 shares of stock
	Building	$50,000	$65,000	**	(2) 2 10-year bonds
					(3) $5,000
		* Acquired for $95,000' s.l. depreciation taken
		** Acquired for $75,000; s.l. depreciation taken
		liability of $70,000 is on the property
	Smith
	Machine	$80,000	$80,000
	Automobile	$15,000	$10,000	*	(1) 23 shares of stock
	Truck	$40,000	$30,000	**	(2) 8 10-year bonds
		* Acquired for $15,000; s.l. depreciation taken
		** Acquired for $40,000; s.l. depreciation taken
	Counselor	Services	$10,000		(1) 1 share of stock
					(2) 2 10-year bonds
Determinbe all tax consequences for Jones, Able, Smith, the counselor, and Shriver Corporation
assuming the transfer occurred in 2012. Also assume that Jones, Able, and Smith are unrelated
parties.