Question: Please consider the following, and answer the associated questions. John contributes land (value = $400,000, basis = $300,000, associated mortgage = $330,000) to the Durant

Please consider the following, and answer the associated questions.

John contributes land (value = $400,000, basis = $300,000, associated mortgage = $330,000) to the Durant Company in exchange for a 20% ownership interest, and $35,000 cash.

1. What is John's tax treatment if Durant is a partnership and (b) Durant is an S corporation?

2. What would your answer be if Durant is an S corporation, and other shareholders with an ownership interest of 65% are also involved in the exchange?

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