Sam Rogers forms a corporation
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Sam Rogers forms a corporation. Sam transfers to the corporation property having a basis to him of $15,000 and a fair market value of $27,000 for 900 shares of the $10 par stock of the corporation. A year later,Bill Morrison, who is not related to Sam, transfers property having a basis to him of $1,000 and a fair market value of $3,000 for 100 shares of the corporate stock. The corporation issued no other stock.
a. How much gain does Sam recognize on his exchange? What is the basis to Sam of his 900shares?
b. How much gain does Bill recognize on his exchange? What is the basis to Bill of his 100shares?
c. What gain or loss is recognized by the corporation when it issues its shares to Sam?What is the basis to the corporation of the property it received from Sam?
d. What is the gain or loss recognized by the corporation when it issues its shares to Bill? What is the basis to the corporation of the property it received from Bill?
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Sam Rogers forms a corporation. Sam transfers to the corporation property having a basis to him of $15,000 and a fair market value of $27,000 for 900 shares of the $10 par stock of the corporation. A year later,Bill Morrison, who is not related to Sam, transfers property having a basis to him of $1,000 and a fair market value of $3,000 for 100 shares of the corporate stock. The corporation issued no other stock.
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a. How much gain does Sam recognize on his exchange? What is the basis to Sam of his 900 shares?
The trade is a Section 351 exchange, so Sam wouldn't recognize a gain on the exchange. Sam's basis for the 900 shares is the basis of the property, which is $15,000.
b. How much gain does Bill recognize on his exchange? What is the basis to ...
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