Harry and Ginny form Potter Corporation. Harry transfers cash of $250,000 for 200 shares in Potter Corporation. Ginny transfers property with a basis of $50,000 and fair market value of $230,000. She agrees to accept 200 shares in Potter Corporation for the property and for providing bookkeeping services to the corporation in its first year of operation. The value of Ginny's services is $20,000. 

With respect to the transfer: 

a) What is Ginny's realized gain? 

b) What is Ginny's recognized gain on the transfer of property? 

c) How does Ginny treat the $20,000 for bookkeeping services? 

d) What is Potter's basis in the property it received from Ginny?

Answer rating: 100% (QA)

Analyzing Ginnys Contribution to Potter Corporation a Realized Gain Ginnys realized gain is the diff... View the full answer