Question: Corporate Formations Problem Mary & Todd form the MT Corp, with a transfer of the following properties: Mary $600,000 cash Todd $600,000 FMV property $450,000

Corporate Formations Problem

Mary & Todd form the MT Corp, with a transfer of the following properties:

Mary $600,000 cash

Todd $600,000 FMV property

$450,000 tax basis

Mary will receive 50% and Todd 50% of the corporate stock'

Complete the following Mary Todd

Realized gain

Recognized gain

Basis of Stock

MT basis in contributed asset

VARIATION 1: Return to original facts (same basis). Todd's property is valued at $800,000 but is contributed subject to a $200,000 liability. (This means that Todd still contributes equity of $600,000 so it is still a 50/50 split of ownership.

Mary Todd

Realized gain

Recognized gain

Basis of Stock

MT basis in contributed asset

VARIATION 2: Same as Variation 1 (same basis) except Todd's property is valued at $1,100,000 and is contributed subject to a liability of $500,000. (Again Todd contributes $600,000 of equity)

Mary Todd

Realized gain

Recognized gain

Basis of Stock

MT basis in contributed asset

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