Question

1- nn and Bob form Robin Corporation. Ann transfers property worth $352,500 (basis of $123,375) for 70 shares in Robin Corporation. Bob receives 30 shares for property worth $141,000 (basis of $28,200) and for legal services (worth $14,100) in organizing the corporation.

a. What gain or income, if any, will the parties recognize on the transfer?

Ann recognizes   of $. Bob recognizes   of $.

b. What basis do Ann and Bob have in the Robin Corporation stock?

Ann has a basis of $, and Bob has a basis of $ in the stock.

c. What is Robin Corporation's basis in the property and services it received from Ann and Bob?

Robin Corporation has a basis of $ in the property Ann transferred and a basis of $ in the property Bob transferred.

2- Ervin and Hyatt form Hendrix Corporation. Ervin transfers property (basis of $360,000 and value of $440,000) for 75 shares in Hendrix Corporation. Hyatt transfers property (basis of $215,000 and value of $300,000) and agrees to serve as manager of Hendrix for one year; in return, Hyatt receives 75 shares in Hendrix. The value of Hyatt's services to Hendrix is $140,000.

a. Ervin recognizes $ gain on the transfer. Hyatt has income of $.

Questions have arisen concerning what constitutes property for purposes of § 351. In general, the definition of property is comprehensive. For example, along with plant and equipment, unrealized receivables of a cash basis taxpayer and installment obligations are considered property.

b. What is Hendrix Corporation’s basis in the property transferred by Ervin and Hyatt? How does Hendrix treat the value of the services that Hyatt renders?

Hendrix Corporation has a basis of $ in the property it acquires from Ervin and a basis of $ in the property it acquires from Hyatt . It has a business deduction  for the value of the services Hyatt renders.

Answer 1

Page No o Answert → Ann tramater property worth $352,500 ( basis - of $12.5,345) for to shared in Robin Corporation, = Bob receives ao shares for property worth $191,000 (basis of 428,200) and for legal qervice & (worth $14,100) in Organizing the corporation a); ann does not recognize gain U Bob srecognizes a gain of $149.100. the value of Services Bob rendered to the corporation. - It does not recognize gain on the transfer of the property to the corporation, because no boot received. b & . Ann Ann has a basis of $123,375 in the stock of Robin Corporation

Pageno i Bob has a basis of $ 42,300 in his stock in Robin Corporation. = improperty transfer + gain hacognized = 28,200 + 14,100 = 42,300 Robin Corporation has a basis of $123, 345 in the Propeaty of Anm tranffered and'a başiş of$ 28, 200 in Property Bob transferred. Robin Corporation Capitalize $ $ 19.100 al. organi şug cost.