Juan owns 100% of D Corporation's single class of stock. Juan transfers land and a building having a $30,000 and $100,000 adjusted basis, respectively, to D Corporation in exchange for additional D Corporation common stock worth $200,000 and IBM stock worth $20,000. The IBM stock had a $5,000 basis on D Corporation's books. Pedro transfers $50,000 in cash for 15% of the D Corporation common stock. What amount of gain or loss is recognized by Juan and D Corporation on the exchange?

Juan has come to you for advice so provide him with a professional memo on the issue, based on the IRC, treasury regulations, ruling and court cases if applicable. DO NOT USE IRS PUBLICATION OR OTHER UNRELIABLE SOURCES. Use proper tax language and IRAC form - issues,. rules, analysis conclusion.

 

Instructions

1. Create your professional memo.

Answer rating: 100% (QA)

Memo To Juan From Your Name Date Date Subject Recognition of Gain or Loss on Exchange of Assets with D Corporation Issue The issue at hand is to deter... View the full answer