Multiple shareholders form a new corporation in exchange for stock with a fair market value of $1,000 per share. Marky transfers investment land (current fair market value of $35,000) that he purchased 10 year ago for $15,000. In exchange, Marky receives 30 shares of stock and $5,000 cash. Anders transfers a machine with a basis of $45,000 and a fair market value of $35,000. Anders receives 30 shares of stock and $5,000 cash. Emmy transfers a rental office building (current fair market value of $45,000) that she purchased 20 years ago for $60,000. Its current basis is $15,000 after recognition of $45,000 in depreciation expense. The corporation assumes the $20,000 balance on the original mortgage and Emmy receives 25 shares of stock from the corporation in the exchange. Jace provided the legal services to organize the corporation (value $5,000) and contributes $10,000 in cash in exchange for 15 shares of stock. How much gain does Emmy recognize? a. 0 b. $5,000 c. $15,000 d. $20,000 What is Emmy’s basis in the stock she received? a. 0 b. $5,000 c. $15,000 d. $20,000
Multiple shareholders form a new corporation in exchange for stock with a fair market value of $1,000 per share. Marky transfers investment land (current fair market value of $35,000) that he purchased 10 year ago for $15,000. In exchange, Marky receives 30 shares of stock and $5,000 cash. Anders transfers a machine with a basis of $45,000 and a fair market value of $35,000. Anders receives 30 shares of stock and $5,000 cash. Emmy transfers a rental office building (current fair market value of $45,000) that she purchased 20 years ago for $60,000. Its current basis is $15,000 after recognition of $45,000 in
a. 0
b. $5,000
c. $15,000
d. $20,000
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