Barry and Irv form Swift Corporation.Barry transfers cash of $100,000 and equipment (basis of $300,000 and fair market value of $400,000)for 50% of Swift's stock.Irv transfers land and building (basis of $510,000 and fair market value of $450,000)and agrees to manage the business for one year for the other 50% of Swift's stock.The value of Irv's services for one year is $50,000.
Definitions:
Diminishing Returns
The principle where the increase in the quantity of input will, after a certain point, yield progressively smaller increases in output.
Costs Of Production
The total expenses incurred in the manufacturing of a product, including raw materials, labor, and overhead.
Input Prices
The costs or expenses incurred in acquiring the raw materials and services needed to produce a product.
Miles Per Gallon
A measure of fuel efficiency in vehicles, indicating how many miles a vehicle can travel on one gallon of fuel.
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