Trish and Ron Form Pine Corporation

question 105

Essay

Trish and Ron form Pine Corporation. Trish transfers inventory (basis of $60,000 and fair market value of $110,000) for 50% of the stock in Pine. Ron transfers machinery (basis of $20,000 and fair market value of $60,000) and agrees to serve as manager of Pine Corporation for one year for 50% of the stock. What are the tax consequences to Trish, Ron, and Pine Corporation?

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Definitions:

Nondiscriminatory Sentence

A sentence in communication that avoids bias, prejudice, or unfair references to gender, race, age, or other personal characteristics.

Millennial Generation

A demographic cohort following Generation X, typically defined as being born from the early 1980s to the mid-1990s to early 2000s.

Precise Language

The use of clear, exact, and accurate terms to convey a message.

Correct Idioms

The use of expressions that are grammatically correct and where the figurative meanings are appropriately applied.