At the time, the limousine business has an FMV of $2 million and a basis of $500,000. Joe has the equivalent aggregate FMV and basis in his businesses. What are the tax consequences to Jane and Joe respectively?
7. Jane and Joe are a wealthy couple. In part, this wealth is attributable to Jane’s highly successful limousine business. Although Joe has been involved somewhat in the limousine business, he has a variety of other ventures and assets. Jane decides it should be clearly established that she had legal control over the limousine business and how it is run. As a result, the two enter into a contract pursuant to which Jane foregoes all claims to all business ventures in exchange for Joe agreeing to do the same with respect to the limousine business. At the time, the limousine business has an FMV of $2 million and a basis of $500,000. Joe has the equivalent aggregate FMV and basis in his businesses. What are the tax consequences to Jane and Joe respectively?
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