Melanie and Sonny form Bird Enterprises.Sonny contributes cash of $100,000 and land worth $50,000 (adjusted basis of $30,000).Melanie contributes land and building worth $280,000 (adjusted basis of $200,000)and performs services worth $20,000 associated with the formation of the entity.Melanie receives a two-thirds ownership interest and Sonny receives a one-third ownership interest.Determine the tax consequences of the contributions to Melanie,Sonny,and Bird if the business is:
Definitions:
Net Income
The total profit or loss of a business after all expenses, including taxes and interest, have been subtracted from total revenue.
Deferred Revenue
Money received by a company for goods or services which have not yet been delivered or provided, recognized as a liability.
Season Tickets
Tickets sold for a set number of pre-determined events, commonly used for sporting events, theater performances, and concerts, often offering a price advantage over single-event purchases.
Magazine Subscription
A payment made to receive regular issues of a magazine for a specified period, often recognized as deferred revenue in accounting until the subscription is fulfilled.
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