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Patel and Pierce form PP Corporation by making the following transfers: Adjusted Basis Fair Market Value From Patel, Cash $36

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Answer #1

Neither patel nor pierce recognise income.

As the contribution is made towards formation of a corporation and for the purpose of earning any income, only the share income that is received from the corporation will be taxable in the hands of Patel and pierce. There won't be any tax treatment as there is no income generated.

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