Jane and Walt form Yellow Corporation. Jane transfers equipment worth $950,000 (basis of $200,000) and cash of $50,000 to Yellow Corporation for 50% of its stock. Walt transfers a building and land worth $1,050,000 (basis of $400,000) for 50% of Yellow’s stock and $50,000 in cash.

Question 12 options:

a)	Jane recognizes a gain of $750,000; Walt recognizes gain of $650,000.

b)	Neither Jane nor Walt recognizes gain.

c)	Jane recognizes a gain of $50,000; Walt has no gain.

d)	Jane recognizes no gain; Walt recognizes gain of $50,000.

Answer rating: 100% (QA)

a Jane recognizes a gain of 750000 Walt recognizes gain of 650000 Janes basis in ... View the full answer