Question

Martha and Tom form the MT Corporation, with a transfer of the following properties:

                Martha $1,200,000 cash

               

                Tom $800,000 FMV property

                                                                $300,000 tax basis

                                               

                                                                               

Martha will receive 60% and Tom 40% of the corporate stock.

Complete the following

                                                                                                Martha Tom

                Realized gain                                                          _______ ________

                Recognized gain                                                  _______    _______

                Basis of Stock                                                     _______                    _______

                MT basis in contributed asset                  _______                      _______

VARIATION 1: return to original facts (no Karla). Tom’s property is valued at $1,100,000 but is contributed subject to a $300,000 liability.   

Complete the following

                                                                                                Martha Tom

                Realized gain                                                      ________                           ________

                Recognized gain                                                ________                           _________

                Basis of stock                                                     _________                         _________

                MT basis in contributed asset                     __________                       _________

VARIATION 2: Same as Variation 1 except Tom’s property is valued at $1,200,000 and is contributed subject to a liability of $400,000.

Answer 1

Hi