Robert, Kim, Tony, and Sharon Decided to Form the Cash

question 64

Essay

Robert, Kim, Tony, and Sharon decided to form the Cash Cow Corporation. In exchange for 40 percent of the stock, Robert contributed an apartment building with a fair market value of $700,000 and subject to a liability of $300,000. Robert's basis in the apartment building is $225,000. Kim contributed warehouse storage units worth $450,000 in exchange for 40 percent of the stock plus $50,000 in cash from the corporation. Her basis in the warehouse is $125,000. Tony contributed $100,000 cash for 10 percent of the stock. Sharon is performing services worth $100,000 for 10 percent of the stock.
a. What is the recognized gain or recognized income for:
1. Robert
2. Kim
3. Tony
4. Sharon
b. What is the basis in the stock for:
1. Robert
2. Kim
3. Tony
4. Sharon
c. What is the corporation's basis in:
1. The apartment building
2. The warehouse

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Definitions:

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