Problem 2: The following three individuals decide to form TOBY, INC., a C corporation: James: Receives 500 shares of stock Services performed (developed technology platform) $40,000 Contributed computer and peripheral equipment 5,000 10,000 Jenna: Receives 500 shares of stock Cash 20,000 Office furnishings (desk, chairs, retail fixtures) 10,000 30,000 Ollie: Receives 500 shares of stock Land and Building 30,000 100,000 Mortgage on land & building (assumed by TOBY, INC.) 60,000 Does James have income, gain or loss on the transaction in which he receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss. What is James’s basis in TOBY, INC. stock? Does Jenna have income, gain, or loss on the transaction in which she receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss. What is Jenna’s basis in TOBY, INC. stock? Does Ollie have income, gain , or loss on the transaction in which he receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss. What is Ollie’s basis in his TOBY, INC. stock? What basis does TOBY, INC. have in: The computer and peripheral equipment Office furnishings Land and building

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Problem 2:

The following three individuals decide to form TOBY, INC., a C corporation:

James: Receives 500 shares of stock

Jenna: Receives 500 shares of stock

Ollie: Receives 500 shares of stock

Does James have income, gain or loss on the transaction in which he receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss.
What is James’s basis in TOBY, INC. stock?
Does Jenna have income, gain, or loss on the transaction in which she receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss.
What is Jenna’s basis in TOBY, INC. stock?
Does Ollie have income, gain , or loss on the transaction in which he receives stock in TOBY, INC.? Indicate the amount of any income, gain, or loss.
What is Ollie’s basis in his TOBY, INC. stock?
What basis does TOBY, INC. have in:
1. The computer and peripheral equipment
2. Office furnishings
3. Land and building