Corporate Formation $($LO $11\mathrm{.}7)$

Dylan, Devon, and Ricken form Lemon Corporation in the current year. Dylan contributes $$30,000$ cash in exchange for $30$ shares of Lemon. Devon contributes land with a market value of $$50,000($basis of $$15,000)$ in exchange for $40$ shares and $$10,000$ cash. Ricken provides services to Lemon valued at $$30,000$ in exchange for $30$ shares.

Question Content Area

a$.$ Determine the realized gain or loss on the exchange for each shareholder.

Dylan: fill in the blank $1$ of $1$$

Devon: fill in the blank $1$ of $1$$

Ricken: fill in the blank $1$ of $1$$

Question Content Area

b$.$ Determine the recognized gain or loss $($or income$)$ on the exchange for each shareholder.

First, does this exchange meet the exchange requirements? fill in the blank $1$ of $4$

YesNoNo

Dylan: fill in the blank $1$ of $1$$

Devon: fill in the blank $1$ of $1$$

Ricken: fill in the blank $1$ of $1$$

Question Content Area

c$.$ Determine the basis of each shareholder's stock.

Dylan: fill in the blank $1$ of $1$$

Devon: fill in the blank $1$ of $1$$

Ricken: fill in the blank $1$ of $1$$

Question Content Area

d$.$ Determine Lemon's basis in the land.

fill in the blank $1$ of $1$$