Part II Transfer of Assets to a Corporation points
On January Reed, Susan, John, and Benjamin formed the Baxter Corporation.
Reed received shares of Baxter Corporation stock in exchange for land worth
$ The land was subject to a $ mortgage loan, which the corporation
assumed. Reed's basis in the land was $
Susan received shares of Baxter stock in exchange for inventory valued at $
with a basis of $ John received shares of stock and a $ promissory note
from the corporation in exchange for equipment worth $ with a basis of $
Benjamin received shares of stock in exchange for cash of $ and legal services
worth $ Benjamin provided the first $ worth of legal services for the
formation of the corporation. The corporation incurred no other costs related to its
formation. The other $ worth of services provided by Benjamin was for normal
business operations. The corporation began business on January
a Determine the gain or loss realized by Reed on the transfer.
b Determine the gain or loss recognized by Reed on the transfer.
c Compute the basis of the shares of Baxter Corporation received by Reed.
d What is Baxter Corporation's basis in the land received from Reed?
e Determine the gain or loss realized by Susan on the transfer.
f Determine the gain or loss recognized by Susan on the transfer.
g Compute the basis of the shares of Baxter Corporation received by Susan.
h Compute Baxter Corporation's basis in the inventory received from Susan.
i Determine the gain or loss realized by John on the transfer.
j Determine the gain or loss recognized by John on the transfer.
k Compute the basis of the shares of Baxter Corporation received by John.
Compute the basis of the promissory note received by John.
Determine Baxter Corporation's basis in the equipment received.
n How much income is recognized by Benjamin on the transfer?
o Compute the basis in the shares of Baxter Corporation received by Benjamin.
p How much can Baxter Corporation deduct in for the legal services provided
by Benjamin?
