At the Beginning of the Year, Harold, Missy, and Ranae

question 122

Essay

At the beginning of the year, Harold, Missy, and Ranae formed HMR Corporation as an S corporation. For one-third of the HMR stock, Harold contributed $50,000 cash and land with a fair market value of $75,000 and adjusted tax basis of $60,000. The land was subject to a $45,000 mortgage, which was assumed by HMR on the formation. Missy and Ranae each contributed $80,000 cash to HMR for one-third of the HMR stock. What is Harold's basis in the HMR stock after the formation? What is Missy's basis in her HMR stock after the formation?

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Definitions:

Triracial Hypothesis

A sociological theory suggesting that societies tend to divide populations into three genetically distinct groups: white, black, and an intermediate group, often leading to complex social dynamics.

Socioeconomic Status

A measure of an individual's or family's economic and social position in relation to others, based on income, education, and occupation.

Triracial Stratification

A social hierarchy that divides people into three racio-ethnic groups, often privileging one over the others.

White Elites

Members of the highest social class who are characterized by their racial identity as white, often holding significant power and wealth.