Ron and Gail form Maple Corporation with the following consideration:
|
Consideration Transferred |
|||
|
|
Basis to |
Fair Market |
Number of |
|
From Ron— |
|
|
|
|
Cash |
$ 50,000 |
$ 50,000 |
|
|
Installment obligation |
140,000 |
250,000 |
30 |
|
From Gail— |
|
|
|
|
Cash |
150,000 |
150,000 |
|
|
Equipment |
125,000 |
250,000 |
|
|
Patent |
10,000 |
300,000 |
70 |
The installment obligation has a face amount of $250,000 and was acquired last year from the sale of land held for investment purposes (adjusted basis of $140,000). As to these transactions, provide the following information:
a. Ron’s recognized gain or loss.
b. Ron’s basis in the Maple Corporation stock.
c. Maple Corporation’s basis in the installment obligation.
d. Gail’s recognized gain or loss.
e. Gail’s basis in the Maple Corporation stock.
f. Maple Corporation’s basis in the equipment and the patent.
g. How would your answers to the preceding questions change if Ron received common stock and Gail received preferred stock?
h. How would your answers change if Gail was a partnership?