Sophia and William form the Bobwhite Corporation with the following investments:
Basis
Fair Market Value
From Sophia-
Cash
$300,000
$300,000
From William-
Land
280,000
350,000

Each person is issued one-half of Bobwhite's stock and,in addition,William receives cash of $50,000.

a.
How much gain,if any,must William recognize and what basis does he have in the Bobwhite stock?
b.What is Bobwhite's basis in the land?

Question

Sophia and William form the Bobwhite Corporation with the following investments:
Basis
Fair Market Value
From Sophia-
Cash
$300,000
$300,000
From William-
Land
280,000
350,000
​
Each person is issued one-half of Bobwhite's stock and,in addition,William receives cash of $50,000.
​
a.
How much gain,if any,must William recognize and what basis does he have in the Bobwhite stock?
b.What is Bobwhite's basis in the land?

Quizplus · Accepted Answer

The Answer of Sophia and William form the Bobwhite Corporation with the following investments:
Basis
Fair Market Value
From Sophia-
Cash
$300,000
$300,000
From William-
Land
280,000
350,000
​
Each person is issued one-half of Bobwhite's stock and,in addition,William receives cash of $50,000.
​
a.
How much gain,if any,must William recognize and what basis does he have in the Bobwhite stock?
b.What is Bobwhite's basis in the land?

Sophia and William Form the Bobwhite Corporation with the Following