Individuals Jimmy and Ellen Form JE Corporation

question 53

Essay

Individuals Jimmy and Ellen form JE Corporation. Ellen transfers land and a building with a $175,000 adjusted basis and $200,000 FMV in exchange for 50% of the stock of the JE Corporation and a $20,000 note. Jimmy transfers cash of $200,000 for 50% of the stock and a $20,000 note. The JE stock has a fair market value of $360,000. What is:
(a)the amount of Ellen's gain or loss recognized on the transfer?
(b)the basis of her stock in JE Corporation?
(c)JE Corporation's basis in the land and building (together)transferred by Ellen?

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Definitions:

Non-Exchange Transaction

Transactions where a company or organization receives value without directly giving equivalent value in return, common in governmental and non-profit accounting.

Eligibility Criterion

Eligibility criterion refers to the set of requirements or conditions that individuals or entities must meet in order to qualify for a program, service, or activity.

Bridging Program

Educational or training programs designed to bridge gaps in knowledge or skills, often for professionals seeking to transition into a new field or to meet regulatory requirements.

Budget Numbers

Financial projections or plans for future income and expenditures over a specific period.