Betty joined Jim in forming DBJ Corp. Betty contributed appreciated land for 90 percent of...
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Accounting
Betty joined Jim in forming DBJ Corp. Betty contributed appreciated land for 90 percent of the stock in DBJ. Jim received 10 percent of the DBJ stock valued at $15,000. Determine Jim's tax consequences in each of the following alternative scenarios.
a-1. Jim received the stock in exchange for providing computer-related services for the corporation. What amount of income or gain does Jim recognize on the exchange?
a-2. What is Jim's basis in the stock he received in the exchange?
b-1. Jim contributed the rights to a patent he owned to DBJ in exchange for the DBJ stock. The patent was worth $15,000 and Jim's basis in the patent was $8,000. How much gain does Jim recognize on the exchange?
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