The following facts apply to questions 2 - 7.
Ann, and Irene incorporate their respective businesses and form Dove
Corporation on March 3, 2008. Later, Bob transfers property for stock in Dove
Corporation. Ann, Irene and Bob are the only shareholders in Dove Corporation.
Ann exchanges her property (basis of $100,000 and fair market value of
$400,000) for 280 shares in Dove Corporation on March 3, 2008. The
property transferred by Ann is subject to a liability of $120,000 which
is assumed by Dove Corporation. There was a bona fide business purpose
for the liability (ie, "exception 1" does not apply).
Irene exchanges her property (basis of $140,000 and fair market value of
$600,000) for 600 shares in Dove Corporation on March 4, 2008.
Bob transfers a business building (basis of $1,050,000 and fair market
value of $1,000,000) for 1000 shares in Dove Corporation on December 17,
2010. Bob's transfer is not part of a prearranged plan with Ann and
Irene to incorporate their businesses.
2. What gain or loss, if any, will Bob recognize on the transfer?
Recognized gain/loss = $
3. What gain or loss, if any, will Ann recognize on the transfer?
Recognized gain/loss = $
4. What gain or loss, if any, will Irene recognize on the transfer?
Recognized gain/loss = $
5. What is Bob's basis in his stock?
Bob's stock basis = $
6. What is Ann's basis in her stock?
Ann's stock basis = $
7. What is Irene's basis in her stock?
Irene's stock basis = $
