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Problem $12-17($L$0,2,3)$

Tom and Gail form Owl Corporation with the following consideration:

$\backslash$table$[[,$Consideration Transferred,$\backslash$table$[[$Number of$],[$Shares Issued$]]],[,\backslash$table$[[$Basis to$],[$Transferor$]],\backslash$table$[[$Fair Market$],[$Value$]]],[$From Tom$-],[$Cash$,$$$50,000,$$$50,000,],[$Installment note,$240,000,350,000,40],[$From Gail$-],[$Inventory$,$$$60,000,$$$50,000,],[$Equipment$,125,000,250,000,],[$Patentable invention,$15,000,300,000,60]]$

Tom purchased the $$350,000$ face value installment note last year for $$240,000.$ Regarding these transactions, provide the following information:

If an amount is zero, enter $"0".$

a$.$ Tom's recognized gain or loss.

b$.$ Tom's basis in the Owl Corporation stock.

c$.$ Owl Corporation's basis in the installment note.

$

d$.$ Gail's recognized gain or loss.

e$.$ Gail's basis in the Owl Corporation stock.

$

f$.$ Owl Corporation's basis in the inventory, equipment, and patentable invention.

Inventory: $

Equipment: $

Patentable invention: $

g$.$ Would your answers to the preceding questions change if Tom received common stock and Gail received preferred stock? $,$ because there requirement that the transferors receive the same type of ctock

i$.$ Gail is considering an alternative to the plan as presented above. She is considering selling the inventory to an unrelated third party for $$50,000$ in the current year instead of contributing it to Owl. After the sale, she will transfer the $$50,000$ sales proceeds along with the equipment and patentable invention to Owl for $60$ shares of Owl stock. Whether or not she pursues the alternative, she plans to sell her Owl stock in six years for an anticipated sales price of $$700,000.$ In present value terms and assuming she later sells her Owl stock, determine the tax cost of $(1)$ contributing the property as originally planned, or $(2)$ pursuing the alternative she has identified.

Assume a discount rate of $6\%.$ The present value factors at $6\%$ are $1\mathrm{.}000$ for year $1$ and $0\mathrm{.}7050$ for year $5.$ Further, assume Gail's marginal income tax rate is $32\%$ and her capital gains rate is $15\%.$

If required, round your answers to the nearest dollar.

The present value of tax cost associated with sale of Owl stock for $$700,000$ is $ $-$ The present value of the tax cost associated with the current sale of inventory for $$50,000$ and subsequent sale of Owl stock for $$700,000$ is $

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