You will need to determine if the shareholder has income, realized/recognized gain or loss, and what the shareholder's basis is in the corporation stock. Show your work for maximum points.

1. Roger and Luis form A-1 Plumbing Corporation with the transfer of the following. Roger performs personal services for the corporation with a fair market value of $96,000 in exchange for 400 shares of stock. Luis contributes an installment note receivable (basis $25,000; fair market value $30,000), land (basis $50,000; fair market value $170,000), and inventory (basis $100,000; fair market value $184,000) in exchange for 1,600 shares. Determine Roger and Luis' current income, gain, or loss; calculate the basis that each takes in the A-1 Plumbing Corporation stock.
2. Hannah contributes land with a basis of $75,000 and fair market value of $90,000 and inventory with a basis of $5,000 and fair market value of $11,000 in exchange for 100% of the Indiana Hat Company stock. The land is subject to a $15,000 mortgage. Determine Hannah's recognized gain or loss and the basis in the stock received.
3. Shareholder A transfers real estate with an adjusted basis of $260,000 and fair market value of $350,000 to a newly formed corporation in exchange for 100% of the stock. The corporation assumes the liability on the transferred real estate in the amount of $300,000. Determine the shareholder's recognized gain on the transfer and the basis for his stock.
4. Mia exchanges qualified property, basis of $12,000 and fair market value of $18,000, for 60% of the stock of Fast Corporation. The other 40% of the stock is owned by Paul, who acquired it five years ago. Calculate Mia's current income, gain, or loss and the basis he takes in his shares of Fast stock as a result of this transaction.

Answer rating: 100% (QA)

To determine the income gain or loss and basis for the shareholders in the given scenarios we will analyze each transaction separately 1 Roger and Lui... View the full answer